Credit card debt

Credit card debt results when a client of a credit card company purchases an item or service through the card system. Debt grows through the accrual of interest and penalties when the consumer fails to repay the company for the money they have spent.

If the debt is not paid on time, the company will charge a late-payment penalty and report the late payment to credit rating agencies. Late payment is sometimes referred to as "default". The late-payment penalty increases the customer's total debt.

A customer's interest rate may be significantly increased as a result of them missing multiple payments. The penalty Annual percentage rate (APR) varies between card-issuing companies and is usually disclosed in literature at the time of a credit card application, and also on a paper notification that is sent with the credit card to the customer's residence.

Research shows people with credit card debt are more likely than others to forgo medical care than others and that the likelihood of forgone medical care increases with the magnitude of credit card debt.

Quarterly credit card debt in the United States since 1986 (in billions):

Declines in credit card debt are often misinterpreted because they omit information about charge-offs. Declines in credit card debt may be caused by consumers paying off their debt, credit card companies writing off charged-off debt, or a combination of both. The inclusion of charged-off debt can significantly affect debt trends and the characterization of a nation's financial health.

Consumers commonly pay off a large portion of their credit card debt in the first fiscal quarter of the year because this tends to be when people receive holiday bonuses and tax refunds. Credit card debt tends to increase throughout the rest of the year.

Credit card debt is said^{[clarification needed]} to be higher in industrialized countries. The average U.S. college graduate begins his or her post-college days with more than $2,000 in credit card debt. The median credit card debt in the U.S. is $3,000 and number of cards held is two.^{[better source needed]}