Total U.S. credit card debt in 2017 reached an estimated $931 billion-nearly a 7% increase over 2016. This is according to a recently released report from NerdWallet. (Note: According to the Federal Reserve, actual credit card debt is now more than $1 trillion. NerdWallet’s lower estimate excludes “pre-arranged overdraft plans or overdraft lines of credit that don’t necessarily belong to credit card user”).
In the chart below, we can take a look at where credit card debt falls in relation to other household debt:
NerdWallet’s report includes feedback from a survey of more than 2,000 U.S. adults. The survey asked consumers about their credit card payment habits and what choices led them to build up credit card debt.
Here is a summary of consumer responses to the survey:
- Incomes have not kept up with rising costs. Over the past decade, median annual household income has grown approximately 20%. By contrast, costs in four major spending categories have matched or exceeded income growth:
- Medical expenses: +34%
- Miscellaneous expenses: +30%
- Food and beverage: +22%
- Housing: +20%
- Because of rising healthcare costs, NerdWallet projects that more than 27 million Americans are putting medical expenses on credit cards. This costs an average of $471 in interest for a year’s worth of out-of-pocket medical spending.
- The average household with credit card debt pays $904 in interest annually.
NerdWallet’s survey found that consumers accumulate credit card debt for a variety of reasons, as outlined in the chart below:
Two other interesting points from the survey:
- 41% of Americans report that spending more than they could afford on unnecessary purchases contributed to them going into credit card debt.
- 33% said that spending on necessities their incomes could not cover contributed to their credit card debt.
As an interesting extension to NerdWallet’s credit card debt report, you might want to check out our November, 2017 post on Rising Credit Card Delinquencies.