Americans collectively owe over $1 trillion in credit card debt, with members of Generation X, on average, owing the most and Gen Zers owing the least,CNBC.com Make It reported.
Generation X, defined as those between the ages of 43 and 58, had an average credit card debt that rose to $9,123 in the third quarter of 2023, according to Experian’s latest available data. Next were millennials (ages 27 to 42), whose average balance in that quarter was $6,521, baby boomers (ages 59 to 77), with an average balance of $6,642, and the Silent Generation (78-plus), with an average balance of $3,412.The average balance of members of Generation Z (ages 18 to 26) was the lowest, at $3,262, but that balance increased by around 14 percent.
On an individual level, the overall average balance was around $6,501, according to Experian’s data.
In surveying 1,237 credit card users in early March about their credit card spending and balances, Experian found that 58 percent indicated that their monthly bills have recently increased significantly. Among them, 75 percent said new or increased bills have affected their ability to pay down their credit card balances.
To begin to address credit card dent, Matt Schulz, chief credit analyst at LendingTree, advised borrowers to take a look at how much they owe on their credit cards and how much money they earn each month.
“It has to start there,” he told CNBC Make It. “Once you have that, you can start to make some decisions about your income and expenses and begin to craft your approach.”
He suggested two popular methods to pay down the debt. One is the snowball approach, in which borrowers make the minimum payments on all of their cards, dedicate any extra funds to the card with the smallest balance first, then work their way up to paying down their largest balance. The other is the avalanche approach, in which borrowers focus on the debt with the highest interest rate after making minimum payments on all of their credit cards.
No matter which strategy you choose, the most important thing is to get started sooner rather than later, said Schulz. “There’s no one-size-fits-all answer for which one is best. Ultimately, the best approach for you is the one that will keep you motivated until the end.”
