Is it normal to have credit card debt? 

is it normal to have credit card debt

It is normal for many people to have some level of credit card debt, as credit cards are a common financial tool for managing purchases and building credit. However, it’s important to manage this debt wisely to avoid high interest charges and negative impacts on credit scores.Millions of Americans rely on credit cards to finance large transactions and grow their credit. But is it normal to have credit card debt? Do you have too much debt? Learn how carrying a credit card balance can impact your credit utilization and credit score.    

How Much Credit Card Debt Do Most People Have?

It is normal to have credit card debt. Most financial consumers have a balance, but certain generations carry more credit card debt than others. According to Experian, the average consumer debt balance for credit cards was $5,221 in 2021.1

To better understand your financial standing, take a look at the average credit card debt by generation for 2021:   

  • Generation Z (18-24) – $2,282
  • Millennials (25-40) – $4,576
  • Generation X (41-56) – $7,070
  • Baby boomers (57-75) – $5,804
  • Silent generation (76+) – $3,177

There is no correct answer to the question, “How much credit card debt is too much?” Ideal credit balances depend on your income, like your total net monthly income, and financial standing. Too much debt for one person may be manageable for another. However, your credit utilization rate should not exceed 30% of your overall credit limits. Maxing out your credit cards can negatively impact your credit history and cost you extra money.  

What Is Credit Card Utilization? How Does It Impact Credit? 

There are five key factors that directly impact your credit score. In order of importance, these factors include payment history (35%), credit utilization (30%), length of credit history (15%), credit inquiries (10%), and credit mix (10%). 

Credit utilization plays an essential role in the credit score calculation process because your total debt accounts for 30% of your FICO score. Your credit utilization ratio is the difference between your total credit debt and your total credit limit. To build and maintain a good credit score, keep your credit utilization ratio under 30% of your available credit limit.  

To calculate your credit usage ratio, add up your credit balances and credit limits. Divide your total credit debt by your total credit limit, and then multiply the number by 100. The final calculation is your utilization ratio. 

Suppose you have multiple cards with the following details:

  • Card 1 – Balance of $1,200 with a $2,000 limit
  • Card 2 – Balance of $500 with a $3,000 limit  

Your total balance for both credit cards is $1,700, and your total available credit is $5,000. When you divide $1,700 by $5,000, you get 0.34. Multiplying 0.34 by 100 results in 34%, which is your credit utilization ratio. Since your ratio is higher than 30%, it’s a good idea to consider making higher card payments to pay down your total debt. 

Risks of Making Minimum Payments on Your Credit Card

The ability to make minimum payments is one of the main benefits of credit cards. The minimum amount depends on the credit issuer, but typically you can pay as little as $20 to $40 each month. However, paying only the minimum on your card can cost you more money and leave you in debt longer. 

It’s critical to know how to calculate a card payment to clearly understand how long it will take to pay off your credit card debt. The easiest way to calculate your card payoff date is to use an online credit card payoff calculator. You will need to know your total card balance, APR, and minimum monthly payment amount.     

Suppose you have one card with a $1,500 balance, 20% APR, and a $40 minimum payment. If you only pay the minimum each month, it will take approximately 60 payments to pay off your card. You will end up paying $873.63 in just interest fees! That’s extra cash you could spend on other crucial bills. 

Making higher monthly debt payments can help you save money and improve your credit by lowering your credit utilization. Significant credit card payments can help you become debt free sooner! Once you are debt-free, you can start focusing on growing your savings or planning a luxury vacation!

How To Manage and Pay Down Credit Card Debt

If you are struggling with too much debt, know that strategies are available to pay off credit card debt aggressively.

Focus On One Credit Card 

It can be challenging to form a payment plan if you have multiple credit cards with high balances. However, the snowball or high-interest technique can help you focus on one card. Paying off one card at a time can help you stay motivated and on track.

Snowball Method

The snowball method helps you pay off your debt by starting with your smallest debt. If your smallest balance is $1,000, that’s the credit card you should focus on paying off first. Paying off your smallest debt first is the easiest and quickest option. Pay as much as possible on that debt and pay the minimum on all other credit cards. Then once you pay off that credit card, you move on to the next smallest debt.   

High-Interest Plan

The high-interest plan means focusing on the credit card that has the highest interest rate. The higher the interest rate, the more you will pay to borrow money. You keep more money in your pocket by first paying off the card with the highest annual percentage rate. You can view your credit card APR on your monthly statement or your online account.   

Consolidate Debt

Debt consolidation can simplify your life and help you save money on interest fees. Consolidating debt means merging various debts into one account. Most consumers use a personal loan or balance transfer card to consolidate credit card debt because these installment options typically offer lower interest rates.   

Use a Personal Loan

A personal loan is a great debt consolidation loan option. Eligible borrowers can get a sizable lump sum to pay off multiple credit cards over a few months or years. Repaying credit card debt can be difficult because consumers do not get a repayment schedule. You are forced to calculate a payoff date based on estimated monthly payments. Personal loans provide a dependable repayment schedule with a final payment date so you know when you can expect to be debt free. 

To qualify for a personal loan, you generally need a decent credit score and a steady source of income. Do you have a low credit rating? Don’t worry! Many personal loan lenders have flexible qualification requirements, so almost anyone can be eligible to get emergency cash. You can easily find personal loans for people with bad credit online. Bad credit loans are easier to get, although you should still take time to compare loan offers. 

When you consolidate credit card debt, you can pay fewer interest fees with personal loans because rates are generally decent. Credit cards tend to have extremely high rates, which can make the repayment process difficult. But you could end up saving money by paying off your credit cards with a personal loan. 

Use a Balance Transfer Card 

A balance transfer credit card is a particular credit card that you can use to consolidate existing credit card debt. Qualification for balance transfers depends on your credit score and income. You may not get a high credit limit if you have low credit, so you can only transfer balances up to your credit limit.  

Balance transfer cards typically come with a 0% introductory APR, which helps you save additional money if you pay off your debt before the promotional period ends. However, the interest rate often skyrockets after the promotional period ends, so you can end up with the exact APR you originally had. If you want to use a balance transfer card, ask about the regular APR before you make a final decision. Or ensure you can pay off the balance entirely before the end of the 0% introductory APR period.  

A balance transfer may also incur additional fees for the consumer. Almost every balance transfer card has a balance transfer fee, which is either a flat fee or a percentage of the total balance you transfer. If you have a lot of debt to transfer, a balance transfer card may not be financially suitable for you.   

Effective Strategies for Managing and Reducing Credit Card Debt

Strategy DescriptionBenefitsConsiderations 
Budgeting Allocate a specific portion of income to pay off credit card debt each month. Helps in systemically reducing debt without overwhelming finances. Requires discipline and may need lifestyle adjustments. 
Debt Avalanche MethodFocus on paying off credit with the highest interest rate first, while making minimum payments on others. Saves money on interest over time. Might take longer to see progress in the number of debts. 
Debt Snowball MethodPay off debts starting from the smallest balance, regardless of interest rate. Quick qins boost morale and motivation. May end up paying more in interest over time.
Credit Counseling Seek professional advice from credit counseling agencies. Provides a structured debt management plan and financial education.May involve fees and could impact credit score temporarily. 
Balance TransferTransfer balances from high-interest cards to a card with lower interest. Can reduce interest payments significantly. Often involves transfer fees; requires good credit for best rates. 
Negotiate with CreditorsContact creditors to negotiate lower interest rates or payment plans. Can lead to reduced interest rates and more manageable payment terms. Success is not guaranteed; requires negotiation skills. 
Automate Payments Set up automatic payments to ensure timely payments. Avoids late fees and helps credit score. Requires consistent cash flow to cover payments. 
Limit New Credit Applications Avoid applying for new credit cards or loans. Prevents increasing debt and potential hard inquiries on credit reports. May limit financial flexibility in the short term. 
Disclaimer: This table is for informational purposes only and does not constitute financial advice. Consumers should consider their individual financial situations and consult with financial advisors before implementing any debt management strategy. Strategies may have varying impacts on individual credit scores and financial health.

FAQ: Handling Your Credit Card Bill  

How does credit card debt affect my credit report?

Credit card debt can significantly impact your credit report. High balances can lower your credit score, while timely payments can improve it. Credit reporting agencies monitor your card balance and payment history, which are key factors in your credit report.

What happens if I only make minimum credit card payments?

Making only the minimum payments can extend the time it takes to clear your debt and increase the total amount of interest paid. This approach can also affect your credit score by keeping your credit utilization high.

How is paying interest on credit card balances calculated?

Interest on credit balances is calculated based on your annual percentage rate (APR) and the amount you owe. The longer you carry a balance, the more interest you will accrue, making it more challenging to pay off your debt.

Can high credit card balances impact my debt-to-income ratio?

Yes, high credit card spending and balances can negatively impact your debt-to-income ratio. This ratio measures your monthly debt payments against your income, and a high ratio can affect your ability to obtain new credit or loans.

What should I consider before transferring a balance to a card with an introductory balance transfer fee?

Before transferring a balance, consider the introductory transfer fee, the interest rate after the introductory period, and how it will affect your overall debt repayment plan.

How often should I check my credit card bills?

Regularly checking your credit bills is crucial. Monthly reviews help you stay aware of your spending, manage your budget, and quickly address any unauthorized charges or errors.

Is there a risk in having too much credit card debt?

Carrying too much credit card debt can lead to financial strain, higher interest costs, and a negative impact on your credit score. It’s important to manage your debt wisely to maintain financial health.

How do credit bureaus view credit card debt?

Credit bureaus view credit card debt as part of your overall credit usage. Keeping your balances low relative to your credit limits is viewed positively, while high balances can lower your credit score.

What strategies can help in reducing my credit card balance more effectively?

Strategies like paying more than the minimum amount, targeting high-interest cards first, and avoiding new charges can help reduce your credit balance more effectively.

How can I avoid accumulating too much credit card debt?

To avoid accumulating too much credit debt, monitor your spending, create a budget, use credit cards for essential purchases only, and try to pay off the full balance each month to avoid paying interest.

A Word From CreditNinja on Handling High Credit Card Balances 

It is entirely normal to have credit card debt. However, credit debt can become a problem if you max out your credit limits and only pay the minimum each month. Carrying a balance costs a lot of money since the interest rates are typically high with credit card companies. Working to pay down your debt can save you money and improve your credit score. 

Credit card debt affects your credit score by 30%! Your credit can decrease when your total balances are more than 30% of your available credit. Low credit scores can limit your financial opportunities and cost you more money. But by actively working on paying off your balances, you can avoid overwhelming credit card debt! If you have more debt than you can manage, you can consolidate that debt to simplify the repayment process. 

CreditNinja is dedicated to making sure all consumers have access to financial resources so they can learn and make effective decisions regarding their finances. If you’re looking to learn more, be sure to check out the CreditNinja dojo for tons of free articles, debt calculators, and other financial resources! 


  1. Consumer Debt Continued to Grow in 2021 │Experian
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