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Credit Card Debt? Surfing, Not Drowning

Some crucial context on Americans’ “out of control” debt levels.

“Credit Card Debt Crisis”

“Credit Card Debt Hits New Record”

“Americans Are Drowning in Credit-Card Debt”

These or similar media headlines may have you fearing that consumers are being crushed by a wave of credit card debt that threatens to take down the entire U.S. economy.

If so, take a breath. We’ve got some good news.

Yes, American credit card debt levels recently surpassed $1 trillion for the first time ever—while total household debt also hit an all-time high (around $17 trillion)1. On the surface, those developments seem to warrant the media’s fearmongering.

Source: Bloomberg, as of 09/29/23

But a closer look reveals a different perspective: Americans’ overall financial health should be strong enough to absorb and manage that debt. Compare consumers’ debt levels with their total household assets, for example, and a far more positive picture comes into focus:

  • Credit card debt relative to total assets (the black line and the data on the left side of the chart below) is a mere 1%–right on par with the long-term, pre-pandemic average 2 of 1.1%. Notice, too, that today’s debt-to-assets ratio is also significantly lower than 20 years ago.
  • Total household debt compared to total assets (the yellow line and the data on the right side of the chart) is just 15.4% today. That’s well below the long-term average2 of 17.8%.

Moreover, 30- and 90-day credit card delinquency rates—though up from their all-time lows—are also below their long-term averages2.

The upshot: Consumers’ balance sheets and their ability to service their “out of control” debt remain strong—particularly when considering last week’s jobs report showed continued labor market resilience, and the fact that wages have grown faster than inflation since May.

Does all of this mean no one will experience debt-related financial challenges in the coming months? Of course not. Rising debt and higher rates will mean trouble for some. But in aggregate, Americans don’t appear to be drowning in debt—they’re surfing on it.

For more news, information, and analysis, visit the ETF Strategist Channel.


1 “Household Debt and Credit Report, Q3 2023”, Federal Reserve Bank of New York.

2 2010-2019

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