Credit card debt has become an increasingly common financial burden for many Americans. With the ease of swiping a piece of plastic to make purchases, it can be all too tempting to spend beyond your means. But at what point does credit card debt become excessive or unmanageable? Here’s an in-depth look at what is considered a lot of credit card debt.
The Average Credit Card Debt
First, it helps to understand where most Americans stand when it comes to credit card debt. According to Experian, the average credit card debt per borrower was $5,525 as of 2022. This number has steadily increased over the past decade, up from an average of $4,176 in 2011.
However, averages only tell part of the story. Over half of Americans with credit card debt owe less than $5,000. On the other hand, a sizeable minority owe far more. About 1 in 6 Americans carry credit card debt between $10,000 and $24,999. And 1 in 20 owe a staggering $25,000 or more.
Debt Thresholds by Age
Credit card debt tends to increase with age, peaking between ages 45-54 according to Experian data. Here are the average credit card debt levels by age group:
- Ages 18-24: $2,379
- Ages 25-34: $4,189
- Ages 35-44: $5,675
- Ages 45-54: $7,750
- Ages 55-64: $7,087
- Ages 65+: $5,638
As these numbers illustrate, younger adults tend to have lower average balances. Credit card debt starts mounting in the 30s and peaks in the late 40s and early 50s. After age 55, average balances gradually decrease as older adults pay down debt and enter retirement.
What’s Considered High Credit Card Debt?
Financial experts don’t agree on an exact threshold for when credit card debt becomes “high.” But most agree debt above $10,000 should be cause for concern. About 1 in 6 Americans fall into this high debt category based on Experian data.
According to debt relief company Freedom Debt Relief, high credit card debt is:
- Above $7,500 for borrowers with excellent credit (scores above 800)
- Above $10,000 for borrowers with good credit (scores of 670-739)
- Above $12,500 for borrowers with average credit (scores of 580-669)
So while having debt over $10,000 is high for most, the debt threshold for what’s considered high also depends on your individual credit score and income level.
Signs Your Debt Level is Too High
More important than any specific dollar amount threshold is how manageable your credit card debt is for your budget and lifestyle.
Here are some signs your credit card debt may be too high or unmanageable:
- You’re only able to make the minimum payment each month
- You’ve maxed out your credit cards and have no available credit
- You’re relying on credit cards to pay for basic necessities and monthly bills
- You’ve taken out a loan or transferred balances to pay off credit card debt
- You’ve missed or been late on credit card payments
- Your debt is causing significant stress or keeps you up at night
If any of these apply, it’s a red flag you may be taking on more credit card debt than you can realistically pay back. Even if your balance seems average compared to national statistics.
How Much Credit Card Debt is Too Much?
Many financial experts recommend keeping credit card debt below 30% of your available credit limit. Going above that threshold can negatively impact your credit score. It also becomes harder to pay off debt when such a large portion of your available credit is already tapped out.
Ideally, you want to keep credit card debt below 10% of your credit limit. While allowing for reasonable use of credit cards for convenience and rewards, this keeps your balances very manageable.
As far as income, a general guideline is to keep credit card debt below 5% of your annual pre-tax income. For example, someone earning $50,000 a year would aim to keep credit card balances under $2,500.
But more than any rule of thumb, focus on keeping credit card debt at a level you can realistically pay off each month while leaving room in your budget for other financial goals and priorities.
How Much Credit Card Debt is Critical?
Credit card debt becomes critical or unrecoverable when balances balloon so high that minimum payments no longer cover the accruing interest charges. This situation makes it mathematically impossible to pay off the debt through minimum payments alone.
According to credit counseling agency Money Management International, credit card debt becomes critical when it exceeds 50% of your annual salary. For example, a debt burden over $25,000 would be critical for someone earning $50,000 per year.
Not only is critical credit card debt difficult to pay off, it makes even keeping up with minimum payments unsustainable. This type of spiraling debt typically requires professional help through credit counseling or debt management plans.
Average Credit Card Debt by Income
Higher incomes allow for higher debt loads. But that doesn’t mean high earners should allow their balances to balloon without limit. Here are the average credit card debt levels by income brackets, according to Experian:
| Income Range | Average Credit Card Debt |
| Under $15,000 | $3,777 |
| $15,000 – $24,999 | $4,311 |
| $25,000 – $34,999 | $5,228 |
| $35,000 – $49,999 | $5,997 |
| $50,000 – $74,999 | $7,050 |
| $75,000 – $99,999 | $8,330 |
| $100,000 – $149,999 | $10,036 |
| $150,000+ | $11,600 |
As shown, credit card debt tends to rise alongside income levels. But even those earning over $150,000 have average balances under $12,000. And many high earners likely keep balances lower than these averages.
Average Household Credit Card Debt
Looking at individual borrowers only tells part of the story. Here’s a look at average household credit card debt:
- Average credit card debt per indebted household: $8,252
- Average credit card debt per household with credit card debt: $16,308
The first statistic includes all U.S. households, even those with no credit card debt at all. The second number reflects the average debt level among only those households carrying credit card balances.
Based on these household debt measures, a credit card balance over $10,000 becomes high for the typical household. And debt above $20,000 would be considered extremely high.
Is the Average Debt Load Too High?
Compared to past decades, Americans clearly have much higher credit card debt loads today. For example, in 1990 the average credit card debt per borrower was just $1,240, nearly five times lower than today.
But easy access to credit cards and a cultural shift toward consumer credit has normalized carrying higher balances. As credit card debt keeps rising, what’s considered average or high debt continues shifting as well.
Many experts argue that credit cards encourage unsustainable debt for most households. And average debt statistics don’t paint a healthy financial picture. Just because high balances have become more common doesn’t mean they are ideal. Most households would benefit from lowering their debt burdens.
The Extreme End: Severe Credit Card Debt
On the most extreme end, severe credit card debt exceeds $50,000 per individual or $100,000 per household. This level of crushing high interest debt becomes a financial emergency making day-to-day expenses and bill payments nearly impossible.
According to Debt.org, signs of severe credit card debt include:
- Dedicating more than 50% of monthly income to debt service
- No available credit across multiple credit cards
- Dependence on payday loans or cash advances to pay monthly bills
- Credit card balances exceeding twice your annual salary
- Falling behind on mortgage, rent, or utility payments
- Going without food, medicine, or healthcare because of unaffordable debt
This degree of credit card debt requires professional help and likely debt restructuring or bankruptcy to overcome. But the situation can be avoided by taking actions like budgeting, cutting expenses, and seeking help long before balances spiral out of control.
Rules of Thumb for Credit Card Debt
While there are no magic numbers for how much credit card debt is too much, these rules of thumb may help guide reasonable debt levels:
- Aim to keep credit card balances below 10% of your credit limits
- Keep credit card debt below 5% of your annual pre-tax income
- Focus on paying off cards in full each month and avoiding interest charges
- Build an emergency fund equal to 3-6 months of expenses before carrying credit card balances
- Have a repayment strategy with set monthly payments to eliminate debt
By following basic guidelines like these, you can ensure your credit card debt remains affordable and manageable long term.
Key Takeaways
Here are some key takeaways on what’s considered a healthy, reasonable, or high credit card debt load:
- The average credit card debt is around $5,500 per borrower or $8,000 per indebted household
- Debt above $10,000 often signals high credit card debt
- Letting balances exceed 30% of available credit limits makes debt harder to manage
- Keep credit card debt below 5% of your annual income
- Severe credit card debt exceeds $50,000 for an individual or $100,000 per household
- Focus on keeping your debt affordable and payable each month, rather than comparing to national averages
The Bottom Line
Ultimately, any credit card debt that causes financial stress or hardship is too much. Instead of fixating on what’s average or normal, focus on mindfulness of your spending habits and paying off cards in full each month whenever possible. Sticking to these wise money management principles will help keep your credit card debt from ever becoming excessive.