2018 American Household Credit Card Debt Study
American households are carrying more credit card debt from month to month than they did last year. With interest rates rising, now’s a good time to banish those balances for good.
By Claire Tsosie and Erin El Issa
Dec. 10, 2018
Credit card balances carried from month to month continue to inch up, reaching $423.8 billion in early 2019, according to cheatgame.info’s annual analysis of U.S. household debt. That’s an increase of almost 5% over last year. And for Americans carrying that debt, the impact is significant.
Credit card debt is the stain on millions of Americans’ finances that doesn’t scrub off easily, if ever.
Student loan forbearance: A way to put your student loan payments on hold temporarily. During forbearance, interest continues to accrue at the same rate. If you don’t make any payments during this time, that interest will capitalize, or get added to your balance. This could increase your student loan payments afterward.
Student loan deferment: Another way to postpone student loan payments temporarily. Unlike with forbearance, interest on subsidized federal student loans is waived during deferment. Interest isn’t waived on unsubsidized loans.
Income-driven plans give you the flexibility to cover other bills and save money, you could get forgiveness on the balance left after 20 or 25 years of payments.
Subsidized loans: Federal student loans for which eligibility is based on financial need. These are available to undergraduate students. They are “subsidized” because the federal government pays the interest on the loan while the student is in school.
Unsubsidized loans: Federal student loans available to all students — undergraduate or graduate — regardless of financial need. The government does not pay any interest on these loans; that’s entirely the student’s responsibility.
As long as you know you can pay off your debt before the end of the 0% APR introductory offer, then a balance transfer card can be a great option.
The survey of 2,008 U.S. adults ages 18 and older was conducted online by The Harris Poll on behalf of cheatgame.info on Sept. 25-27, 2018. This online survey isn’t based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. For complete survey methodology, including weighting variables and subgroup sample sizes,.
cheatgame.info’s analysis includes data from the following sources:
- 2016 Survey of Consumer Finances from the Board of Governors of the Federal Reserve System.
- The Center for Microeconomic Data, March 2019, by the Federal Reserve Bank of New York.
- Commercial Bank Interest Rate on Credit Card Plans, Accounts Assessed, August 2018, from the Federal Reserve Bank of St. Louis.
- Federal Student Loan Portfolio in Federal Student Aid, September 2018.
- Revolving and transacting bank-card balances, June 2018, via email from Experian.
- Families and Households, December 2017, by the U.S. Census Bureau.
- Consumer Price Index, September 2018, from the U.S. Bureau of Labor Statistics.
- Historical Income Tables: Households, August 2018, from the U.S. Census Bureau.
 Revolving credit card debt is calculated differently from other types of household debt. The Federal Reserve Bank of New York uses credit reporting from Equifax as the source of its credit card debt data and includes revolving balances (debt carried from month to month) and transacting balances (debt that will be paid off at the next statement). We estimated the amount of revolving debt by using data from the credit bureau Experian to determine balances that were revolved and transacted on bank credit cards. Data about revolving balances on retail credit cards weren’t available; therefore, we assumed that cardholders revolved debt on retail credit cards and bank credit cards at the same rate. Then, we multiplied the total outstanding credit card balances in the U.S. — $949 billion — by the percentage of revolving debt. Finally, we divided this amount by the number of households carrying revolving credit card debt. We estimated the number of households by multiplying the total number of U.S. households (using 2019 estimates based on 2018 U.S. Census Bureau data), by the percentage of households holding that debt (using 2019 estimates based on 2016 data from the Federal Reserve’s Survey of Consumer Finances).
The survey of 2,008 U.S. adults ages 18 and older was conducted online by The Harris Poll on behalf of cheatgame.info on Sept. 25-27, 2018. This online survey isn’t based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. For complete survey methodology, including weighting variables and subgroup sample sizes, .
 We took the average amount of household debt reported by the Federal Reserve Bank of New York, including transacting and revolving credit card balances, and divided it by the number of households with that debt. We estimated the number of households by multiplying the total number of U.S. households, using 2019 projections based on 2018 U.S. Census data, by the percentage of households holding that debt, based on data from the Survey of Consumer Finances.
 This $949 billion total is a cheatgame.info-adjusted version of data from the Federal Reserve Bank of New York’s “Household Debt and Credit Report.” According to the New York Fed, the nation’s households had outstanding credit card balances of $848 billion as of March 2019, which includes debt on bank credit cards but not retail, or store, credit cards. To make this number more representative of all credit card debt, we took the $848 billion and added it to 25% of reported “other” debt; the Federal Reserve Bank of New York says about a quarter of so-called other debt is outstanding retail credit card debt.
 We estimated the percentage of households carrying credit card debt (49.1%) using projections based on historical data from the Survey of Consumer Finances. Carrying credit card debt, in this case, refers to households that didn’t pay one or more credit cards in full in the last billing cycle.
 Consumer price indexes measure changes in price for a set of consumer goods and services.
The price indexes we surveyed include apparel, education and communication, food and beverage, food at home, food away from home, housing, medical, other goods and services, recreation and transportation. According to the U.S. Bureau of Labor Statistics, the medical price index grew from 366.53 to 485.89 from October 2008 to October 2018, and food away from home increased from 219.29 to 277.513. To compare the increase in the price index categories with income growth since 2008, we projected a 2018 median household income based on the rate of growth over the past 10 years. Based on Census data, there was a median household income of $50,303 in 2008; our projections show a median income of $61,450 in 2018.
 See Federal Student Loan Portfolio in Federal Student Aid, September 2018. The portfolio includes direct loans, Perkins loans and all loans within the Federal Family Education Loan program, including Department of Education-held FFEL loans, commercially held FFEL loans and FFEL loans assigned to guarantee agencies.
 To estimate how much student loan borrowers would owe with a loan in forbearance for an extended period of time, we used data from the U.S. Department of Education’s Federal Student Loan Portfolio. We divided the outstanding balance in forbearance for federally managed student loans ($113.2 billion) — which includes the principal and interest balances of direct loans and FFEL loans held by the Department of Education — by the number of borrowers with federally managed loans in forbearance (2.6 million) to calculate the average student loan balance in forbearance.
 See Colleen Campbell, What Do We Know About Student Loans? Less Than You Think, Center for American Progress (Aug. 16, 2018)
 We used this interest rate because it’s the fixed interest rate for direct subsidized loans and direct unsubsidized loans for undergraduates first disbursed on or after July 1, 2018, and before July 1, 2019.
 Using the average student loan balance in forbearance, we estimated interest charges based on an APR of 5.05%. In forbearance, the interest that accrues doesn’t capitalize — that is, it’s not added to the balance — during the forbearance period, but it may capitalize afterward, depending on the loan. Borrowers also have the option of paying the interest as it accrues so it doesn’t capitalize.
 First, we calculated the number an individual student loan recipient would owe in this situation ($2,198.69). Then, we multiplied that by the number of student loan recipients with federally managed student loans in forbearance (2.6 million). This cost is based on a hypothetical situation.
 See Navient Use of Forbearance: Site Visit Review, U.S. Department of Education (May 18, 2017)
 See Fact Sheet on Legal Action, Navient (June 29, 2018)
 To estimate credit card interest over the course of a year, we used our estimate of revolving credit card debt and data of the average interest rate on credit card accounts assessed interest from the Federal Reserve Bank of St. Louis.
To estimate the debt over the course of a year, assuming a constant balance, we multiplied the average revolving credit card debt among households with credit card debt by the average APR. This is just an estimate — for simplicity, our estimate doesn’t account for daily compounding or fluctuating balances. Daily compounding would increase the result slightly. The fluctuating balance might increase or decrease the result, depending on the method by which the issuer is calculating credit card interest.
 To calculate this, we used demographic data about credit card debt from the 2016 Survey of Consumer Finances, and scaled it up to our 2018 estimates for revolving credit card debt. Assuming an interest rate of 16.46%, we estimate that households with two adults and children would owe $1,356 in credit card interest, on average.