The Pandemic Has Plunged Americans Into Severe Credit Card Debt: 2021 Data

🔎 Credit Card Debt Statistics 55% of Americans carry a balance on their credit cards from month to month —  including nearly one in five who owe more than $20,000.

As the pandemic stretches into a second year, global debt has reached record highs — even surpassing the devastation of World War II. 

Though experts say this debt is crucial for keeping people and businesses around the world afloat, they also caution that recovery could be rocky as payments eventually come due. 

On an individual scale, Inside 1031 recently surveyed 1,000 Americans who own one or more credit cards about how the pandemic has impacted their personal finances. Since March 2020, 45% of Americans have taken on more credit card debt. In particular, individuals who carry a credit card balance from month to month are 2.2x more likely to report having more debt now than before the pandemic. 

This is a reversal from the pandemic’s earliest days, when widespread lockdowns slashed consumer spending. According to the Consumer Financial Protection Bureau, credit card debt steeply declined through May 2020 but began to creep up again in August as emergency financial assistance programs ran out. 

As the COVID-19 Delta variant brings back mask mandates and restrictions in some regions, individuals and businesses have adapted to pandemic conditions and spending habits. Credit cards are an important element of American spending, with 16% of people owning five or more credit cards and 73% predicting that America will eventually become a cashless society, according to our data.

To learn more about how Americans use their credit cards — and how much credit card debt they live with — our survey asked respondents if they carry credit card debt from month to month or pay their balance in full. From there, we posed 20 questions that revealed the current state of Americans’ finances. 

Key Takeaways

• Since the pandemic began in March 2020, 44% of Americans have taken on more credit card debt, and just 26% of Americans have less credit card debt.
• More than half of Americans (55%) carry a credit card balance from month to month. 
• Among Americans with credit card debt, 40% haven’t been debt-free since before 2018 — and 15% say they’ve carried a balance since before 2006. 
• Nearly 1 in 5 Americans (18%) have more than $20,000 in credit card debt:
  • Gen Xers are the most likely generation to owe more than $15,000 (32%) in credit card debt.
  • Millennials are resigned to having credit card debt, with 7% feeling indifferent about being unable to pay their monthly balance. By contrast, Gen Xers are the most anxious, with 49% saying their credit card debt is moderately or extremely stressful. 
• More than half of Americans (57%) have missed at least one credit card payment, with 31% most recently missing a payment in 2021 and 28% most recently missing a payment in 2020. 
• 61% worry that potential lockdowns will negatively impact their financial situation — a fear that those who carry a monthly balance are 26% more likely to hold. 
• Nearly one-third of Americans (28%) don’t know their credit cards’ interest rates. 
  • Americans who have credit card debt are 11% more likely to know their interest rates compared to those who pay their monthly balance in full.
• 17% of Americans don’t know their current credit score.
• 45% of Americans wouldn’t pursue a relationship with someone who has significant credit card debt — particularly boomers, with 71% saying credit card debt would be a deal breaker. 
• Credit card debt has the biggest impact on Americans’ ability to build an emergency fund (35%) and pay off other debts (35%). 
• 37% of Americans currently have less than $1,000 in emergency savings — and 13% have no emergency savings at all.
• 33% of Americans with credit card debt predict they will spend more than two years paying it off. 
  • One in five Americans (20%) expect to spend 3 years or more paying off their credit card debt.
  • 3% of Americans believe it won’t ever be possible to pay off their credit card debt. Compared to millennials, boomers are 2.3x more likely to believe they’ll never pay off their credit card debt.

More Than Half of Americans Carry a Monthly Credit Card Balance

Credit card debt can quickly snowball for those who can’t afford to pay their balance in full — a group that includes the majority of Americans.

Some Americans have carried a monthly credit card balance for years: 40% haven’t been credit card debt-free since before 2018 — and 15% say they’ve carried a monthly balance since before 2006 (more than 15 years). 

Overall, we found that 55% of people carry a credit card balance from month to month.  

Among those who do pay their credit card balance in full, 65% have had credit card debt in the past:

• 17% just finished paying off their credit card debt this year
• 11% paid off their credit card debt in 2020
• 7% paid off their credit card debt in 2019
• 5% paid off their credit card debt in 2018
• 26% paid off their credit card debt in 2017 or earlier

Still, some Americans who have had credit card debt in the past have managed to avoid sliding back into debt. 

Among those we surveyed, 10% haven’t had credit card debt since before 2006, meaning they managed to endure the 2008 financial crisis and the pandemic without accumulating debt again.

We asked credit card owners who pay their monthly credit card balance in full how they do so. The most common responses include:

• Limiting spending to what they can afford to pay off in full (49%)
• Limiting discretionary spending (36%)
• Limiting credit card use or using other forms of payment (36%)
• Having more income than expenses (35%)
• Spending less because of COVID-19 (28%)
• Having no other debt (23%)
• Receiving help from family or other income sources (19%)

For consumers who have accumulated a monthly balance they can’t pay in full, the Consumer Financial Protection Bureau recommends asking to set up a payment plan. Some credit card companies can also offer temporary forbearance for individuals experiencing certain hardships, which many consumers qualified for during the pandemic. 

Nearly 1 in 5 Americans Have More Than $20,000 in Credit Card Debt

In 2019, Inside 1031’s sister site, Clever Real Estate, found that just 5% of Americans had more than $25,000 in credit card debt. Today, that number has more than doubled, with 12% of our respondents reporting credit card debt of $25,000 or more.

Among credit card owners who carry a balance from month to month, we found that:

• 18% have more than $20,000 in credit card debt
• 26% have more than $15,000 in credit card debt
• 46% have more than $5,000 in credit card debt

Credit card debt also varies generationally, with Gen Xers being the most likely to owe more than $15,000 (32%) — and carry the highest levels of personal debt overall. By contrast, just 17% of Gen Zers, 25% of millennials, and 16% of baby boomers owe more than $15,000.

More Than Half of Americans Have Missed a Credit Card Payment

It’s common for Americans to miss credit card payments. 

More than half of Americans (57%) say they’ve missed at least one credit card payment in the past, with 31% most recently missing a payment in 2021 and 28% most recently missing a payment in 2020.

This is up from 2019, when just 28% of respondents admitted they’d missed a monthly payment. 

A small minority of 11% haven’t missed a credit card payment since 2016.

Americans who pay off their credit card balance each month were 60% more likely to never miss a payment, compared to those who reported carrying a balance month-to-month.

The most common reason for missing a payment was simply forgetting (37%), followed by:

• Paying for food/groceries (32%)
• Paying for utilities (31%)
• Paying for an unexpected emergency (31%)
• Prioritizing other forms of debt (29%)
• Paying rent or mortgage (25%)
• Spending too much on nonessentials (23%)
• Losing a job or income (21%)
• Something else (2%)

Significantly, forgetfulness was more common in 2019, when 59% of respondents cited it as the reason for missed payments. It’s likely this increase reflects high levels of unemployment and other challenges of the pandemic, in which people simply don’t have money to spend paying down credit card debt. 

People who pay their monthly credit card balance in full are 41% more likely to miss a payment due to forgetfulness. Those who carry a balance are 19% more likely to miss payments due to unemployment/income loss and 15% more likely to miss a payment due to prioritizing other forms of debt.

Despite Widespread Debt, Half of Americans Say Credit Card Debt Stress Is “Mild” — and 5% Say They’re Indifferent

Credit card debt is so common that it’s just a fact of life for many Americans. 

We found that carrying a monthly credit card balance doesn’t always provoke anxiety. Among those who carry a balance:

• 5% are indifferent
• 21% are not stressed 
• 28% are slightly stressed
• 23% are moderately stressed
• 22% are extremely stressed

Millennials are particularly resigned to having credit card debt, with 7% feeling indifferent about being unable to pay their monthly balance. By contrast, Gen Xers are the most anxious, with 49% saying their credit card debt is moderately or extremely stressful. 

For some, the thought of having credit card debt itself is a stressor. Among those who pay their full balance each month, 67% are at least somewhat worried about getting into credit card debt in the future, including 35% who feel very worried about the possibility of future debt. 

These feelings of stress and anxiety may intensify as new variants of COVID-19 force the world back into widespread restrictions: 61% worry that potential upcoming lockdowns will negatively impact their financial situation — a fear that is 26% more likely to be held by those who carry a monthly balance. 

COVID-19, Medical Emergencies, and Other Types of Debt Keep Americans Locked in Credit Card Debt

More than one year into the pandemic, 38% of Americans experienced significant delays receiving unemployment benefits. As states continue to struggle with outdated systems and high rates of unemployment, Americans may be relying on their credit cards to fill in the gaps. 

We found that 49% of Americans depend on credit cards to cover essential living expenses — particularly younger generations. 61% of Gen Zers, as well as 53% of both millennials and Gen Xers, use credit cards for living expenses, compared to just 26% of boomers. 

Today, the top financial stressors driving Americans into credit card debt include:

• COVID-19 (29%) 
• Illness or a medical emergency (27%) 
• Financially supporting a family member within the same household (26%) or outside the household (19%)
• Job loss (23%) 

Beyond the pandemic’s strain, commonplace life events can also drive Americans into credit card debt — or keep them there. Additional life events that can result in credit card debt include:

• Dealing with non-credit card debts (33%)
• Moving (22%)  
• Pet expenses (22%) 
• Going on vacation (19%)
• Buying a home (18%)
• Going to school (17%) 
• Having a child (15%)
• Having a wedding (13%) 

Americans who carry a monthly credit card balance are especially vulnerable to falling further into debt due to life events. Compared to those who pay their monthly balance in full, Americans with existing credit card debt are:

• 42% more likely to go into debt from school expenses
• 24% more likely to go into debt for a wedding
• 24% more likely to go into debt for financially supporting a family member
• 19% more likely to go into debt from veterinary expenses
• 18% more likely to go into debt from moving
• 17% more likely to go into debt from a medical emergency

As life events cause credit card debt to grow, compounding interest can make it even more difficult for Americans to exit the cycle of carrying a credit card balance forward month after month. 

Confusion Over Interest Rates and Credit Scores Can Contribute to Patterns of Debt

Widespread confusion over interest rates and credit scores may contribute to Americans’ credit card debt, causing Americans to underestimate the financial consequences of carrying a monthly credit card balance.

We found that nearly one-third of Americans (28%) don’t know their credit cards’ interest rates. Americans who have credit card debt are 11% more likely to know their interest rates, compared to those who pay their monthly balance in full.

Currently, the average interest rates are 18.04% for new accounts and 15.10% for existing accounts — potentially adding thousands of dollars in interest to existing credit card debt. 

For example, the average American currently has $7,519 in credit card debt. Assuming someone makes 2% minimum monthly payment at the average annual percentage rate (APR) of 14.61%, it would take 365 months to completely pay off if no new purchases were added. That’s 30.4 years!

Further, 17% of Americans say they don’t know their current credit score — which significantly impacts the interest rates they pay.  

According to Equifax, the average credit score in the U.S. is currently 698 out of a possible 850. (In general, scores above 720 are considered excellent.) Americans who meet the average credit score are typically eligible for a wide range of financial products — but may pay higher interest rates, increasing the risk of revolving credit card debt. 

35% of Americans Struggle to Save for Emergencies and Other Life Events

Among Americans with credit card debt, more than one in three (35%) find it difficult to prepare for emergencies, retirement, or other life events. 

When asked how credit card debt impacts other spending, Americans who have credit card debt cited difficulty:

• Building an emergency fund (35%)
• Paying off other debts (35%)
• Saving for retirement (32%)
• Buying a car (23%)
• Moving (18%)
• Purchasing a home (17%)
• Saving for or attending college (14%)
• Having a child (12%)
• Having a wedding (11%)

Given the way credit card debt can shape Americans’ ability to financially prepare for major life events, it’s perhaps not surprising that credit card debt carries social stigma. 

45% of respondents say they wouldn’t pursue a relationship with someone who has significant credit card debt — with 71% of boomers saying credit card debt would be a deal breaker.  

Younger generations are more forgiving of credit card debt, with just 39% of millennials and Gen Xers and 41% of Gen Zers saying they wouldn’t pursue a relationship with someone who had credit card debt. 

Individuals who have credit card debt themselves are 24% more likely to pursue a relationship with someone who also has credit card debt. 

Nearly Half of Americans Say They’d Use Emergency Savings to Cover a $2,000 Emergency — but 37% Have Less Than $1,000 in Savings 

When facing a $2,000 emergency, 44% of Americans assume they would draw on emergency funds or their general savings.

Yet 37% currently have less than $1,000 in emergency savings — and 13% have no emergency savings at all:

• No emergency savings (13%)
• Less than $500 (13%)
• $500 – $999 (11%)
• $1,000 – $4,999 (20%)
• $5,000 – $14,999 (15%)
• $15,000 – $19,999 (7%)
• $20,000 – $24,999 (6%)
• $25,000 or more (15%)

Unsurprisingly, Americans who have credit card debt also struggle to save. Those who carry a monthly balance are 3x more likely to report having no emergency savings and 2.6x more likely to have less than $500 in their emergency fund.

With so many Americans coping with meager savings, 43% say they would have to use their credit cards to cover a $2,000 emergency.

The top ways Americans would pay for a $2,000 emergency include:

• Using emergency or general savings (44%)
• Using credit cards (43%)
• Borrowing from friends or family (23%)
• Cashing out retirement accounts (16%)
• Payday loans (15%)
• Cashing out equity from a home or other property (14%)
• Title loans (12%)

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Credit card debt influences Americans’ strategies for covering emergencies. For example, people who have credit card debt are 41% more likely to borrow from friends or family and 12% more likely to pull from a retirement account.

By contrast, Americans who pay off their credit card balance in full each month are 53% more likely to say their savings would cover an emergency. 

33% of Americans With Credit Card Debt Say It Will Take More Than Two Years to Pay Off

The majority of Americans want to reduce their reliance on credit cards — possibly because it’s so difficult to get out of debt.

Across all Americans — including those with and without debt — 60% want to use their credit cards less. This desire is intensified for those who have debt, with 82% of those with credit card debt hoping they won’t have to use credit cards as much in the future.

This makes sense, given that 33% of Americans with credit card debt predict they will spend more than two years paying it off. What’s more, one in five Americans (20%) expect to pay off their debt in 3 years or more:

• Within one year (39%)
• 2 years (24%)
• 3 years (13%)
• 4 years (6%)
• 5 years (5%)
• More than 5 years (6%)
• Never (3%)

Notably, 3% of Americans believe they will never pay off their credit card debt. Compared to millennials, boomers are 2.3x more likely to believe they’ll never pay off their credit card debt.

Methodology

Inside 1031 surveyed 1,000 Americans who currently own at least one credit card. 

Respondents answered up to 20 questions about their credit card use and debt. 

For comparisons between those who carry credit card debt and those who do not, data was split by whether respondents chose “I carry a balance on my credit card from month to month” or “I pay off my credit card balance in full each month” when asked which best described their credit card usage, respectively.

About Inside 1031

Inside 1031 is the top resource for 1031 exchange help for real estate investors. Powered by a team of real estate experts, Inside 1031 connects readers with data-driven research and advice about navigating the 1031 exchange, qualified intermediaries, DST real estate investments, and more. Clever Real Estate, a free agent-matching service that has helped consumers save $70 million on realtor fees, acquired Inside 1031 in 2021.

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