NerdWallet’s annual look at household debt finds that credit card debt is up nearly 16% compared with last year, for a total of more than $1.2 trillion, as of September 2023. Mortgages, auto loans, student loans and overall debt loads also increased over the past year.
Their annual report analyzes government data from sources such as the U.S. Bureau of Labor Statistics and the Federal Reserve Bank of New York to see how household debt has changed over the past year.
Key findings
Income hasn’t grown as fast as expenses in recent years. While income growth has exceeded growth in the cost of living over the past decade, the inverse is true when you look only at the past four years. Costs are up 20% since 2019, while median income is up 12%.
Indebted Americans want to pay off their balances, but the higher cost of living poses challenges. According to the survey, most Americans who currently have revolving credit card debt (89%) are trying to pay it off over the next year, but 50% say the rising cost of goods could affect their ability to do so.
Credit card debt causes stress for many who carry it. The survey shows that close to half of Americans with revolving credit card debt (48%) say they are stressed about it. It’s the No. 1 stressor for 27% of those with revolving balances.
Increasing interest rates are making debt payoff harder and much more expensive. More than 2 in 5 Americans with revolving credit card debt (43%) say rising interest rates are a roadblock to paying it off in the next 12 months, the survey found. Based on average interest rates, each $1,000 in credit card debt a consumer carries costs an additional $56 a year in interest charges now compared with two years ago, according to NerdWallet’s analysis.
Many who are indebted think they’ll be that way forever. The survey found that around one-third of Americans with revolving credit card debt (34%) say they’ll probably always have some revolving balances.
“It’s hard not to feel stuck if you have credit card debt. Interest rates are high, everything you buy costs more and incomes just aren’t keeping up,” says Sara Rathner, a credit cards expert at NerdWallet. “Credit card debt has long been viewed as the result of frivolous spending, but it’s really just because of how difficult it can be to keep your head above water.”
