Flywheel Publishing has partnered with CardRatings for our coverage of credit card products. Flywheel Publishing and CardRatings may receive a commission from card issuers.

Americans are awash in debt. The Federal Reserve Bank of New York says household debt and credit rose to a staggering $17.94 trillion in the third quarter.

Although most of that is from home mortgages, or $12.59 trillion (over 70% of the total), credit card balances increased by $24 billion to reach $1.17 trillion, a new record. That’s 8.1% greater than where it stood one year ago.

What’s worse, credit card delinquencies continue to be a problem. While the number of accounts transitioning to delinquent status nominally improved during the quarter to 8.8% from 9.2%, it remains at an elevated level.

Yet according to the Fed, the average balance on credit cards rose 4.8% year-over-year to $6,329. While that’s better than the 11.2% increase last year and 12.4% increase in 2022, it is still moving in the wrong direction. It shows just how difficult families have it trying to make ends meet.

24/7 Wall St. Insights:

• Credit card debt is growing to crisis proportions as balances hit almost $1.2 trillion, an all-time record amount.
• There may be some anecdotal evidence to suggest it takes consumers as long as six years to pay off a single purchase, meaning they are racking up exorbitant interest fees.
• Paying down your credit card debt as quickly as possible is one of the best ways to get an immediate return on your investment.

The high cost of getting by

It is interesting there are no national statistics available on how long it takes for the average American to pay off that bill. Perhaps because of differing terms, interest rates, and other factors it is a number not easily calculable, but credit card issuers themselves may know.

According to a Redditor on the r/personalfinance subreddit, he works for a major store brand credit card issuer (think, all the major retail branded cards) and discovered the horrifying truth: credit card users take on average six years to pay off a single purchase, and that’s at annual percentage rates of 29.99%.

This underscores just how bad the economy is for most people.

Although there doesn’t seem to be a way to confirm or deny the claim, we do know if someone just pays the minimum amount due on a $6,000 balance it can take as long as 25 years to pay down the balance. Obviously paying more than the minimum will reduce the payback time and will save you a significant amount of interest.

It is one of the reasons financial planners will tell you to make as large of a payment on your credit card debt as you can. It offers immediate return on investment. And then if you snowball that amount to your other credit cards, you can quickly eliminate your debt. Even better, aim to pay off the balance in full each month and avoid interest charges altogether.

Key takeaways

The goal should be to not use a credit card at all, because of the debt trap too many people fall into. With over $1 trillion in credit card debt, it is clear though that too many are relying upon plastic to make it through.

Credit cards can be useful tools if used prudently, but the growing charge balances show that too many are being forced to rely upon debt to get buy. With average balances exceeding $6,000, anecdotal evidence suggests it is taking consumers as long as six years to pay off a single purchase.

Because interest charges on credit cards makes it some of the most expensive debt out there, users should focus on paying down their balances as quickly as possible for an immediate return on investment.

Flywheel Publishing has partnered with CardRatings for our coverage of credit card products. Flywheel Publishing and CardRatings may receive a commission from card issuers.

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