Americans facing dual challenge of trying to save while managing credit card debt

Higher income individuals recorded larger increases in card balances in 2023.

Millions of Americans are finding it harder to save while adding to their debt burden with increased credit card usage.

A new anonymized analysis of self-reported financial data of Planswell users found that those with incomes above $75,000 saw a far larger increase in average credit card debt than those earning less, mostly likely due to the differing level of credit availability.

For the sub-$75K group there was a 6% increase year-over-year in average credit card debt, while three higher income bands ($75,000-100,000; $100K-150K; and above $150K) saw increases between 12% and 16%.

“The percentage of credit card debt relative to income is a striking indicator of the challenges individuals face in managing their financial obligations,” said Eric Arnold, CEO of Planswell. “These worrying trends call for a comprehensive approach to address both the root causes and consequences of mounting credit card debt for all Americans.”

Regardless of income, the analysis reveals an overall 16% increase in credit card balances.

“The surge in average credit card balances further exacerbates the financial burden on individuals and families,” expressed Arnold. “This heightened reliance on credit may indicate a coping mechanism for immediate financial needs, but it also poses risks to long-term financial health.”

Meanwhile, savings are losing steam with average monthly savings among the lowest income group down a staggering 41% in 2023 compared to 2022, with the next two highest groups showing a decrease of 21% and 13% respectively, and even a 2% decrease for those with incomes above $150,000.

“These significant reductions in average monthly savings underscore the widespread financial strain affecting Americans from all income groups,” added Arnold. “The decline in savings rates is a critical indicator of the economic challenges faced by households, emphasizing the need for professional support and financial education.”