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Average Credit Card Debt Between $3,000 and $5,000

[Monday, August 12th, 2013]

Depending on who you ask, the average amount of credit card debt per person in the United States is somewhere around $5,000, give or take a thousand.

The Federal Reserve Bank of New York puts the number at $5,047. In a recent monthly report, revolving debt was around $800 billion. Since there are around 240 million people in the U.S., you could divide this number and assume that average debt per person is about $3,333. However, children don’t have credit cards. Neither do some adults. When they adjusted for kids and people without credit cards, the Federal Reserve came up with the $5,047 estimate.

TransUnion, one of the three major credit card bureaus that collect information about consumers and debt, put the average credit card debt at $4,878 per person. Ezra Becker, a vice president in the research and consulting division at TransUnion, said that estimating average debt is “subtle and complex” and that complexity accounts for the differing amounts across financial institutions.

Regardless of debt amount, one popular way to bring it down is by transferring the balance to a new credit card with no interest for a promotional period. Immediately after the financial crisis of 2008, banks became more cautious about offering these types of cards, but they are once again flooding the market and 0% balance transfer deals are now easier to find than they were five years ago.

Balance transfer cards let customers move a balance from one card to another, typically paying a balance transfer fee of around 3% or some minimum charge like $10, whichever is higher. They can then pay the balance down at a low or 0% APR, saving hundreds of dollars on interest.

The savings for a person who transfers a $5,000 balance to a 0% balance transfer card over 18 months is $678, if the balance was at 19.99%. That savings includes a 3% balance transfer fee. Paying down a balance when there is no interest charge can greatly increase the time it takes consumers to get out of debt.

In order to get the longest 0% interest rate offer on a balance transfer, people must usually have a good credit rating. However, there are increasingly good offers even for people with average credit. They may be able to get 1% or 0% APR for six months or a year, depending on their credit score. The longest possible 0% term is usually about 21 months.

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