Few Americans Report ‘Financial Freedom’ Amid Record High Credit Card Debt

U.S. credit card debt has reached an all-time high of $1.031 trillion owed as of the end of the year’s second quarter, with few Americans reporting having financial freedom.

According to a new survey from Achieve, just 11% reported they are living their definition of financial freedom. In defining financial freedom, 12.6% of respondents believed it meant being rich, while 32.1% said it was having enough money to give up working.

“We’re seeing far fewer Americans with the goal of becoming ‘rich’ and many families pivoting to just trying to be able to pay their bills on time,” Brad Stroh, co-founder and co-CEO of Achieve, said in a statement. “With all of the economic pressures facing American families, financial freedom is currently more about making ends meet.”

Although Americans reported low levels of financial freedom, many are still optimistic, Achieve found. More than half (52%) of individuals said their progress toward this goal is improving, as opposed to 37% who report it is getting worse.

Achieve’s data came from a July survey of 1,000 U.S. consumers aged 18 and older.

Economic pressure and the impact of rising costs are certainly affecting how Americans are managing their finances. In separate research, personal finance firm WalletHub found that Americans are, in fact, managing debt better than in the past. Total credit card debt, when taking inflation into account, is currently below its peak by 18%.

“When you account for the massive impact inflation has on balances as well as the fact that debt-to-deposit levels are roughly 50% below the peak, U.S. households are actually in a lot better shape financially than it seems at first glance,” Odysseas Papadimitriou, WalletHub’s CEO, said in a statement. “Inflation is masking the fact that people are actually managing their debt better than they have in the past.”

At the end of Q2, the average household’s credit card debt was $8,668, 20% below the record on an inflation-adjusted basis.

There have been several times inflation-adjusted debt levels were higher. Credit card debt, adjusted for inflation, actually reached its all-time high in Q4 2008. U.S. households owed more to credit card companies from 2006 to 2009, as well as around 2019, according to WalletHub’s analysis.

The quarterly household debt report by WalletHub is based on analysis of the latest data on consumer finances available from the New York Federal Reserve and the U.S. Bureau of Labor Statistics.