With household finances already under pressure and the Fed’s latest G19 report now available, a new study finds consumers added $43 billion in debt during the second quarter of 2023 – the second-largest Q2 increase ever.
Credit Card Debt Study
- Large Debt Increase. Consumers ended Q2 2023 with almost $43 billion in additional credit card debt. That is the second-largest Q2 increase ever.
- Year-Over-Year Deterioration. We added 16% more credit card debt in Q2 2023 than the same quarter last year.
- Early Q3 Returns: Preliminary data for July shows a 7.72% increase in credit card debt compared to the same month last year.
- High Average Household Debt. The average household credit card balance was $10,170 at the end of Q2 2023. That’s $2,242 below the record set in Q4 2007.
- Best Balance Transfer Credit Cards. The best balance transfer credit card is the Citi Simplicity Card. It offers a 0% introductory APR for the first 21 months, does not charge an annual fee, and has a competitive balance transfer fee.
All figures referenced below are adjusted for inflation.
What the Latest Credit Card Debt Stats Mean
“U.S. consumers are adding new credit card debt at a nearly unprecedented rate,” said Jill Gonzalez, WalletHub analyst. “We added tens of billions of dollars in new credit card debt to our tab during the second quarter alone, which indicates that people are increasingly needing to borrow to make ends meet. Nevertheless, household finances are still in surprisingly strong shape, according to WalletHub’s Household Debt Report.”
What Credit Card Debt Levels Will Look Like at the End of 2023
“WalletHub projects that U.S. consumers will end 2023 owing around $150 billion more to credit card companies than they did at the start of the year,” she added. “This follows on the heels of an inflation-adjusted $116 billion increase in 2022.”
How Expensive is Credit Card Debt Now?
“Credit card debt is more expensive than ever, given that credit card interest rates are higher than ever,” Jill Gonzalez said. “Fortunately for people with good or excellent credit, the best balance transfer credit cards can significantly reduce the cost of debt, offering 0% introductory APRs for as long as 21 months.”
5 Tips for Getting Out of Credit Card Debt Sooner
- Check your credit score to find out what options are realistic. The better your credit score is, the more options you’ll have for low-cost debt relief. Knowing your score will also make it easier to compare offers you have good odds of getting approved for.
- Compare balance transfer credit cards and debt consolidation loans. If you have good credit, you can probably get approved for a 0% balance transfer card or a low-interest debt consolidation loan. Either could reduce the cost of your debt, making it easier to pay off what you owe.
- Focus on paying off the debt with the highest APR first. Some people recommend starting with your smallest balance to get a sense of achievement, but putting the lion’s share of your monthly payment toward the balance with the highest interest rate and making the minimum payment on other balances will save you more money in the long run.
- Don’t mix everyday spending and debt on the same card. If you continue to make purchases with the same card you’re carrying a big balance on, those purchases will start to accrue interest right away. If you use a separate card for everyday spending and pay that card’s bill in full every month, your everyday purchases won’t be inflated by interest.
- Plan for the pricey holiday season. People tend to add the most debt during the fourth quarter of the year. If you want to avoid starting 2024 even further behind the eight ball, now is the time to make a budget that allows you to significantly reduce your debt.