The Heavy Burden of Credit Card Debt: Insights and Tips

Credit card debt has become an increasingly heavy burden for many Americans. Total revolving credit card debt recently surpassed $1 trillion for the first time ever, according to the Federal Reserve. With rising prices and interest rates, more people are relying on credit cards to cover expenses – but this debt can quickly become difficult to manage.At Delancey Street, we want to provide useful insights and tips to help consumers develop a healthier relationship with credit. This article will break down key statistics on credit card debt and delinquencies, look at which states have the highest average balances, and offer advice on strategies to pay down balances responsibly.

Credit Card Debt Levels Hit New Highs

  • The total revolving credit card debt owed by Americans topped $1.031 trillion in Q2 2023, up from $927 billion at the end of 2019.
  • This is the first time credit card debt has exceeded $1 trillion in the U.S..
  • Credit card balances jumped by $175 billion since Q4 2021 as inflation drove up costs.
  • The average credit card interest rate hit a record 20.68% in Q2 2023.

This mountain of credit card debt can become difficult to manage, especially with rising interest rates. Paying it off will likely be a priority for many households in the coming months.

Delinquencies Remain Low Overall

  • Just 2.77% of total credit card balances were 30+ days delinquent as of Q2 2023.
  • This delinquency rate remains low compared to pre-pandemic levels.
  • However, new 30+ day delinquencies are rising from historic lows during the pandemic.

While serious delinquencies still remain relatively low, it’s concerning to see early delinquencies start to tick up. We’ll have to keep an eye on whether repayment challenges increase as interest rates rise.

Gen Z Drives Growth in New Accounts

  • 19 million new credit card accounts were opened in Q2 2023, driven by Gen Zers gaining access.
  • There are now over 530 million total credit card accounts in the U.S..
  • However, delinquencies rose among new and less experienced borrowers.

Younger Americans are taking on more credit card debt early on. This can help build credit history but also poses risks if balances become unmanageable. Financial education is key.

Northeast States Carry the Most Average Debt

The states with the highest average credit card debt per borrower are:

  1. Connecticut – $9,408
  2. Alaska – $8,590
  3. New Jersey – $8,387
  4. Virginia – $8,123
  5. Maryland – $7,959

The Northeast dominates the top spots, while Southern states like Kentucky, Alabama and Mississippi have among the lowest average balances. Regional differences in income and cost of living are likely contributors.

Tips for Paying Down Credit Card Debt

If you’re struggling with credit card debt, here are some tips from Delancey Street to regain control:

  • Consolidate balances onto a lower interest credit card or personal loan
  • Ask issuers to reduce your interest rates – many will if you request
  • Pay more than the minimum due to pay debt faster
  • Balance transfer to a 0% intro APR card to save on interest
  • Track spending and make a budget to limit unnecessary charges
  • Pay on time to avoid late fees and credit score damage

It can take time to pay off credit card debt, but developing healthy habits will help you reach freedom from balances faster. Reach out to a nonprofit credit counseling agency like Delancey Street if you need guidance creating a debt repayment plan.

Looking Ahead at Financial Pressures

Rising inflation, interest rates, and the upcoming restart of federal student loan payments this fall could place further strain on household budgets. We expect credit card debt balances and delinquencies may continue to climb in the near term.However, opportunities exist, such as balance transfer cards and personal loans, that could provide relief to those working diligently to pay off credit card debt. At Delancey Street, we’re here to help consumers make informed financial decisions and take control of their debt situation. Reach out today to speak with one of our lending advisors.

Delancey Street is here for you

Our team is available always to help you. Regardless of whether you need advice, or just want to run a scenario by us. We take pride in the fact our team loves working with our clients - and truly cares about their financial and mental wellbeing.

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