Almost half of all American credit cardholders are carrying debt from month to month, and many have no clear plan for paying it off.
According to a new survey from Bankrate, 48% of cardholders say they carry a balance from month to month. That's down slightly from 50% in mid-2024 but up from 39% in late 2021. Additionally, just over half of those carrying credit card debt (53%) have been in debt for at least a year, down from 60% in mid-2024 but up from 50% in late 2021.
"Credit card balances have risen 51% since early 2021 and credit card delinquencies are at their highest point since 2011, according to the Federal Reserve," Bankrate Senior Industry Analyst Ted Rossman said in a statement. "High inflation and high interest rates have been a nasty combination, and while the worst is behind us, the cumulative effects are significant and will linger."
Among those with debt, 47% say the primary cause was an emergency or unexpected expense, which includes medical bills (15%), car repairs (9%) and home repairs (7%).
The second-most common reason for carrying a balance is day-to-day expenses (28%; groceries, childcare, utilities), followed by retail purchases (11%) and vacation/entertainment expenses (9%).
Of those carrying balances, 3 in 10 (30%) expect to pay off their credit card debt within a year, while 41% expect to pay it off between 1 and 5 years from now.
On the other hand, over 1 in 10 credit card debtors (13%) expect it will take more than a decade to pay off their balances, which includes 6% who say they expect to never get out of credit card debt.
Overall, Gen X (ages 45-60) credit cardholders are more likely to have credit card debt at 54%, compared to 48% of millennials (ages 29-44), 47% of Gen Z (ages 18-28) and 45% of baby boomer cardholders (ages 61-79).
Bankrate pointed out that lower-income cardholders are more likely to carry debt from month to month, but higher-income households with credit card debt are more likely to have long-term debt.
Meanwhile, credit card balances grew by $24 billion during the third quarter of 2024 to reach a record $1.17 trillion, according to the Federal Reserve Bank of New York.
Experts caution that leaning on credit cards can cause long-term financial strain if balances aren't paid off quickly, as high interest rates can quickly escalate the overall cost. As of November 2024, the average credit card interest rate reached 22.8%, according to the Federal Reserve Bank of St. Louis. This means carrying a $1,000 balance on your credit card could cost you around $228 a year in interest alone.