Credit Cards

How America's Overspending Habit Affects Credit Card Debt

In 2019, more than 80% of Americans are trying to reduce their debt burden.

Key Take-Aways

  • Debt is a major burden for most Americans: 85% of American adults are actively trying to decrease their debt, and 74% have credit card debt in general.
  • Women are significantly less confident than men that they could pay off their credit card debt if necessary; 60% of women reported that they would be unable to pay off their total balance versus 35% of men.
  • Midwesterners rack up more expensive credit card bills than other Americans, with 53% of adults in the Midwest carrying more than $2,000 in credit card debt.

Overspending and credit card debt go hand-in-hand, according to our January 2019 survey. More than two-thirds of survey respondents reported overspending by at least $100 a month, and 56% admitted that they don't (or can't) pay off their full credit card bill each month. In light of this, the overwhelming majority of Americans reported that they are actively trying to decrease their outstanding debt burden.

American debt statistics, 2019

We dug into the survey findings to see how America's overspending habit affects credit card debt in particular. You can click through to view credit card debt statistics by age, gender and region.

The Causes of Overspending

The majority of Americans are actively trying to reduce their outstanding debt but at the same time are overspending each month on nonessential purchases. Below are the top five areas where Americans spend too much money each month.

Top five areas of American overspending

The trends seen in the graph above are the same across age groups, genders and regions; generally, Americans struggle most to restrain their spending on socializing (going out to eat and drink) and shopping (online and for clothes). Below, we highlight some of the differences across demographic groups when it comes to debt management.

Credit Card Debt by Age: OIder Americans Are More Burdened

Our survey found that the oldest Americans are most likely to have credit card debt (80%), and the youngest are least likely (63%). Roughly 6 in 10 respondents aged 18 to 24 carried credit card debt, while 8 in 10 respondents who are 55 and older reported carrying debt. However, the majority of respondents in every age group reported having some outstanding balance.

Percentage of respondents by age who have credit card debt

Furthermore, fewer than 1% of respondents aged 18 to 24 reported a credit card debt over $5,000, and average balances in that age group were significantly lower than those of older respondents. The size of outstanding balances may correlate with income and purchasing power, as younger folks tend to have lower-paying jobs.

Percentage of Americans by age with more than $2,000 in credit card debt

Accordingly, those with lower balances were more confident that they could pay off their debt immediately if they needed to. It's possible that older respondents, who are burdened by expenses like child care and homeownership, are forced to draw on their credit lines out of necessity.

Ability to pay off credit card debt by age

Credit Card Debt by Gender: Equal Proportion of Men and Women Carry Debt

Our data shows that the gender breakdown is even when it comes to carrying credit card debt. Men and women are equally likely to have at least some debt, with 74% of people from both genders reporting that they have outstanding card balances.

Credit card debt for men and women

However, women are slightly more likely to have larger outstanding balances, with 46% of women reporting total credit card debts over $2,000 versus 42% of men. As such, the average self-reported credit card debt is $3,484 for women and $2,980 for men—a difference of more than $500. Additionally, almost twice as many women reported having credit card debt of more than $10,000.

Credit card debt of more than $10,000 by gender

We also found that significantly fewer women reported they would be able to pay off their total credit card debt if they needed to.

Percentage of men and women able to pay off their credit card debt

Credit Card Debt by Region: Midwesterners Least Able to Pay Off Their Debt

The percentage of people with credit card debt had little variance by region. In all five regions of the U.S., 70% or more of survey respondents reported that they had at least one credit card debt. (Click here for a list of states in each region.)

Credit card debt by region

The Southeast has the lowest percentage of residents with account balances over $2,000. Average incomes in the Southeastern states are also lower, which again suggests that outstanding card balances may correlate with purchasing power. In contrast, the Midwest had the highest number of residents reporting outstanding balances over $2,000.

Percentage of Americans by region with more than $2,000 in credit card debt

When looking at ability to pay off debt, the same trend across the age demographic was also true by region: The group with the most outstanding debt—in this case, Midwesterners—also reported the least confidence in their ability to pay it off if they needed to.

Percentage of Americans by region who are able to pay off their credit card debt

How to Responsibly Use Credit Cards and Avoid Overspending

If you're struggling with overspending and card debt, there are a few simple steps you can take to put yourself on a path to financial success.

Make a Budget

Making a monthly budget is the best thing you can do if you're struggling with overspending. First, take a look at your monthly income and expenses to see where you can cut back. Once you've identified the problem areas, come up with a spending plan that ensures you have more money coming in than going out. You can use an Excel spreadsheet to track expenses or an automated app like Mint.

Treat Your Credit Line Like Cash

If you have a long credit history, your account limits probably add up to significantly more than you make each month. Even though you may have access to thousands in credit, you should treat your credit line like cash if you're trying to limit your spending. Spend only what you can pay off with the money in your checking account, and you'll reduce the chance that you overspend.

Check Your Credit Score at Least Once a Month

It's important to check your credit score every month to get a full picture of your financial health. If you maintain high balances and use more than 30% of your available credit, you may have some work to do to improve your credit. You can raise your score by keeping your utilization below 10% and paying your bills on time. Doing so will decrease the cost of borrowing money for you, as you'll qualify for lower interest rates.

Take a Break From Credit

If you're having trouble moderating your credit card spending, take a short break from using credit altogether. Make all your purchases with cash or a debit card, and monitor your checking account balance. Relying on cash for a while can help you relearn healthy spending habits.

If All Else Fails, Open a Balance Transfer Card

As a last resort, your best bet is to open a balance transfer credit card if you're in over your head with credit card debt. The best balance transfer cards come with 0% interest during an introductory period, which can help you save money as you pay down your debt. If you go this route, be sure to choose a card with a low balance transfer fee.

Survey Methodology

The data from this study is from a random double opt-in survey of 2,000 Americans conducted online in January 2019. It was commissioned by ValuePenguin and conducted by OnePoll, a market research company and corporate member of ESOMAR, and it adheres to the MRS code of conduct. For more information about OnePoll’s research in the media, click here to navigate to their portfolio.

Regional Definitions

  • Northeast: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont and Washington D.C.
  • Southeast: Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee, Virginia and West Virginia
  • Southwest: Arizona, Arkansas, Louisiana, New Mexico, Oklahoma and Texas
  • Midwest: Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin
  • West: Alaska, California, Colorado, Hawaii, Idaho, Montana, Nevada, Oregon, Utah, Washington and Wyoming
Yowana Wamala

Yowana is a former product analyst at ValuePenguin, specializing in credit cards, rewards programs and travel. He previously covered mortgages, banking and insurance for the website. Yowana graduated from Columbia University with a B.A. in Political Science.

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