Credit card debt is the most prevalent in the United States. According to the Federal See Central bank. More of New York (FRBNY), there are more than 500 million open credit card accounts; 191 million Americans have at least one credit card account, and many have multiple accounts.
According to Credit Karma, a credit score tracking company, U.S. cardholders’ average credit card balance is up 20%. Credit scores had fallen 12 points since March 2022, when the Federal Reserve first started raising interest rates.
U.S. credit card balances reached $930 billion during the third trimester of 2022, per the most recent FRBNY Quarterly Report on Household Debt and Credit.
Graph 1. United States: Year-Over-Year Percent This is the action by which certain banknotes and/or coins are exchanged for the same amount in banknotes/coins of a different face value, or unit value. See Exchange. More in Credit Card Balances, 2004-2022
The Report provides data shedding light on how younger and less wealthy cardholders are using credit cards to deal with the cost-of-living crisis. FRBNY researchers analyzed credit card balances by borrower’s age (see Graph 2) and zip code income (see Graph 3).
Graph 2. United States: Average Credit Card Balances by Age Group in Nominal U.S. Dollars, 2004-2022
Graph 3. United States: Average Credit Card Balances by Zip Code-Income in Nominal U.S. Dollars, 2004-2022
Credit cards are the most common first credit experience for younger borrowers: 73% of Americans have a credit card by age 25, per the FRBNY. Many U.S. young adults are getting their first credit cards lured to see their favorite artists in concert.
Successful artists are partnering with credit card companies to offer fans preferential access to presale tickets, such as Taylor Swift with Capital One and the Coachella Valley Music and Arts Festival with American Express premium cards,
“Whenever you make a purchase that’s unplanned, lots of things can happen. It takes away some of your choices in the future. […] Removing the emotions and the impulses can be very helpful.” – Jamie Wagner, associate professor of economics at the University of Nebraska Omaha.
“Retailers, both online and in Ten straps are commonly called a brick. In other words, a brick is a thousand notes. See Strap. More and mortar, are really skilled. They make an Olympic sport out of making you want to buy things you don’t need,” said Justin Pritchard, the owner of Approach Financial Planning (a retirement planning firm in Montrose, Colorado). Pritchard had some suggestions to avoid impulse purchases with credit cards, including:
Some Gen Z consumers stay away from their credit cards and resort to #Cashstuffing to better manage their budgets. “Money in physical form such as banknotes and coins. More envelope stuffing” has been trending on Tik Tok with over 426 million views at the time of writing.