25 Alarming Facts About Debt in America

Facts About Debt in America

It is no secret that debt is a huge problem in America, however, when most people think about debt in America they think about the national debt (which is in the trillions). The debt that many people are overlooking is the debt that lies within our own homes. In fact, 43 percent of American families spend more money than they make every year.




Why is this still happening? People hear about debt, read articles about budgeting and possibly even seek professional financial advice but we, as Americans, are still allowing ourselves to fall deeper and deeper into debt. Some scholars say this is because people are not educated on the reality of debt in America. Learning about debt and financial wellness is the only way to break the vicious cycle of poverty. In effort to better people’s knowledge of debt in America, here are 25 rather alarming facts:

Facts About Debt in America

  1. Forty-six percent of all Americans carry some kind of credit card debt from month-to-month.
  2. Americans carry $798 billion in credit card debt in all (you could not amass that amount of debt in your lifetime even if you spent $7 billion every day since the day you were born and lived to be 100 years old).
  3. The average amount of credit card debt per household is practically $16,000 and the average interest rate on credit cards in America is just over 13 percent.
  4. People ages 45 to 54 hold the most credit card debt (averaging about $9,000 per person in this age group).
  5. Surprisingly, the more money you make, the more credit card debt you carry. People in the $160,000 a year and more income level carry over $11,000 in credit card debt, on average, compared to those who only make $25,000 a year or less ($3,000 in credit card debt).
  6. The average consumer in America has 3.5 credit cards.
  7. Most Americans have at least one credit card before the age of 21.
  8. On average, men carry $2,000 more in credit card debt than women.
  9. Caucasian Americans carry more credit card debt than any other race in America (averaging over $7,900).
  10. Credit card debt is only a fraction of the problem though. The average American family holds over $132,000 in total debt.
  11. Forty-five percent of all auto loans in America are made to be paid over six years or longer (plenty of cars don’t even last that long).
  12. In America, 70 percent of all car purchases involve a loan.
  13. Mortgage debt is about 70 percent higher than it was just 20 years ago.
  14. The percentage of residential mortgages that are currently in foreclosure sits at 4.5 percent.
  15. Eight million Americans are at least one month behind on their mortgage right now.
  16. About 40 percent of Americans are currently in medical debt or paying off medical bills.
  17. In more than 60 percent of personal bankruptcies medical bills play a major factor in the reasoning behind the individual filing for bankruptcy.
  18. Student loan debt in the United States is over $1 trillion.
  19. About 65 percent of all American college students will graduate with student loan debt.
  20. The default rate on student loans has doubled in the past 10 years.
  21. Twenty-five percent of college students use credit cards to pay their tuition and other fees.
  22. The average American household is paying $6,658 in interest each year.
  23. There is a strong correlation between debt and mental illness. The likelihood of having a mental health problem is three times higher among people with debt than those who have not.
  24. Nearly 1 in 5 of Americans between the ages of 18 and 24 consider themselves to be in some sort of debt hardship.
  25. The rise in cost of living has outpaced growth in income for the past 12 years (this is the root of the debt problem).

How to Get Rid of the Debt Problem in America

How do we fix this problem? Well, there is no one answer to fixing the debt problem in America. However, there is one simple step that could help: get rid of things you don’t need. For the most part people are racking up debt for items and services that just aren’t necessary. For instance, do you really need Netflix AND a premium cable package? Do you need your home phone and cell phone? There are probably a few cuts that you could make in your budget to make it easier to pay off your debt and avoid racking up more debt in the future.

What do you think the answer to America’s debt problem is?

Photo: Flickr: Images Money

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Comments

  1. Number three seems terrifying to me! “The average amount of credit card debt per household is practically $16,000…,” just seems entirely overwhelming! I can’t imagine having something like that over my head at such an interest rate! Thankful that I’m waaaaaay under the average!

    I know banks and corporations are out to make money, but I feel like the greed to make money is what has put America in such a huge debt debacle. I don’t know the answer, but maybe if there were stricter lending rules? Maybe if there were more limits on the amount that people could borrow? I just don’t know, but the numbers on debt are very scary to me.
    K @ One More BROKE TWENTY-SOMETHING recently posted..On Patterns….Old & NewMy Profile

  2. #5 is interesting and a lot of people don’t believe it. Many think “if I just earn a bit more then my money problems will be solved” – but the majority of Americans tend to increase their spending as their income increases… so they never get ahead under that mindset.
    Brad, MaximizeYourMoney recently posted..The risk of not owning stocksMy Profile

  3. I think that mortgage based debt needs to be separated out or at least noted as to what part of the $132,000 average that this represents. At least with a mortgage, in more cases than not, the underlying asset can be sold as a means to cover the debt. This is different than most other kinds of consumer debt where there’s no asset to back the debt.
    Money Beagle recently posted..A Week Long Camping Trip At A New State ParkMy Profile

  4. These statistics are honestly scary! Number 16 is my least favorite – illness or injury shouldn’t equal financial hardship, in my opinion. I honestly don’t know the answer to the debt problem in America, but I think the consumerist and “Keeping up with the Joneses” attitude has a lot to do with it.

  5. I got my first credit card at the age of 20 and I actually so much out of it that made me financially responsible, though the start of it was a bit rough because I got myself into a great amount of debt. Overall, it’s really worth it and learned so much about financial responsibilities.
    Jayson @ Monster Piggy Bank recently posted..10 Creative Ways to Fund Your StartupMy Profile

  6. I think one of the biggest problems is the pervasive mindset that carrying debt is “normal.” While some people can use debt in a healthy and responsible way, most people think it’s unheard of to not carry any. Most people don’t know anyone who is debt-free. Now a days, I think that’s pretty strange.
    Chela @SmashOdyssey recently posted..Life Updates – It’s Been a WhileMy Profile

  7. Hi! Thanks for the post. I am wondering about your sources. Thanks again!

  8. As soon as I hit 18, I rushed out and applied for my first credit card and I was not very responsible with it. I learned over time and now I am really frugal and my husband and I are debt free. I think one issue that I had back then was the fact that I had no concept of/was never taught about money, credit, spending, budgeting, etc. and had to learn as I went. Very interesting facts, thanks for sharing!

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25 Alarming Facts About Debt in America

Facts About Debt in America

It is no secret that debt is a huge problem in America, however, when most people think about debt in America they think about the national debt (which is in the trillions). The debt that many people are overlooking is the debt that lies within our own homes. In fact, 43 percent of American families spend more money than they make every year.




Why is this still happening? People hear about debt, read articles about budgeting and possibly even seek professional financial advice but we, as Americans, are still allowing ourselves to fall deeper and deeper into debt. Some scholars say this is because people are not educated on the reality of debt in America. Learning about debt and financial wellness is the only way to break the vicious cycle of poverty. In effort to better people’s knowledge of debt in America, here are 25 rather alarming facts:

Facts About Debt in America

  1. Forty-six percent of all Americans carry some kind of credit card debt from month-to-month.
  2. Americans carry $798 billion in credit card debt in all (you could not amass that amount of debt in your lifetime even if you spent $7 billion every day since the day you were born and lived to be 100 years old).
  3. The average amount of credit card debt per household is practically $16,000 and the average interest rate on credit cards in America is just over 13 percent.
  4. People ages 45 to 54 hold the most credit card debt (averaging about $9,000 per person in this age group).
  5. Surprisingly, the more money you make, the more credit card debt you carry. People in the $160,000 a year and more income level carry over $11,000 in credit card debt, on average, compared to those who only make $25,000 a year or less ($3,000 in credit card debt).
  6. The average consumer in America has 3.5 credit cards.
  7. Most Americans have at least one credit card before the age of 21.
  8. On average, men carry $2,000 more in credit card debt than women.
  9. Caucasian Americans carry more credit card debt than any other race in America (averaging over $7,900).
  10. Credit card debt is only a fraction of the problem though. The average American family holds over $132,000 in total debt.
  11. Forty-five percent of all auto loans in America are made to be paid over six years or longer (plenty of cars don’t even last that long).
  12. In America, 70 percent of all car purchases involve a loan.
  13. Mortgage debt is about 70 percent higher than it was just 20 years ago.
  14. The percentage of residential mortgages that are currently in foreclosure sits at 4.5 percent.
  15. Eight million Americans are at least one month behind on their mortgage right now.
  16. About 40 percent of Americans are currently in medical debt or paying off medical bills.
  17. In more than 60 percent of personal bankruptcies medical bills play a major factor in the reasoning behind the individual filing for bankruptcy.
  18. Student loan debt in the United States is over $1 trillion.
  19. About 65 percent of all American college students will graduate with student loan debt.
  20. The default rate on student loans has doubled in the past 10 years.
  21. Twenty-five percent of college students use credit cards to pay their tuition and other fees.
  22. The average American household is paying $6,658 in interest each year.
  23. There is a strong correlation between debt and mental illness. The likelihood of having a mental health problem is three times higher among people with debt than those who have not.
  24. Nearly 1 in 5 of Americans between the ages of 18 and 24 consider themselves to be in some sort of debt hardship.
  25. The rise in cost of living has outpaced growth in income for the past 12 years (this is the root of the debt problem).

How to Get Rid of the Debt Problem in America

How do we fix this problem? Well, there is no one answer to fixing the debt problem in America. However, there is one simple step that could help: get rid of things you don’t need. For the most part people are racking up debt for items and services that just aren’t necessary. For instance, do you really need Netflix AND a premium cable package? Do you need your home phone and cell phone? There are probably a few cuts that you could make in your budget to make it easier to pay off your debt and avoid racking up more debt in the future.

What do you think the answer to America’s debt problem is?

Photo: Flickr: Images Money

Enjoy Plunged in Debt?

Pid

Subscribe to get our latest content by email.

Powered by ConvertKit

  1. Number three seems terrifying to me! “The average amount of credit card debt per household is practically $16,000…,” just seems entirely overwhelming! I can’t imagine having something like that over my head at such an interest rate! Thankful that I’m waaaaaay under the average!

    I know banks and corporations are out to make money, but I feel like the greed to make money is what has put America in such a huge debt debacle. I don’t know the answer, but maybe if there were stricter lending rules? Maybe if there were more limits on the amount that people could borrow? I just don’t know, but the numbers on debt are very scary to me.
    K @ One More BROKE TWENTY-SOMETHING recently posted..On Patterns….Old & NewMy Profile

  2. #5 is interesting and a lot of people don’t believe it. Many think “if I just earn a bit more then my money problems will be solved” – but the majority of Americans tend to increase their spending as their income increases… so they never get ahead under that mindset.
    Brad, MaximizeYourMoney recently posted..The risk of not owning stocksMy Profile

  3. Money Beagle says:

    I think that mortgage based debt needs to be separated out or at least noted as to what part of the $132,000 average that this represents. At least with a mortgage, in more cases than not, the underlying asset can be sold as a means to cover the debt. This is different than most other kinds of consumer debt where there’s no asset to back the debt.
    Money Beagle recently posted..A Week Long Camping Trip At A New State ParkMy Profile

  4. These statistics are honestly scary! Number 16 is my least favorite – illness or injury shouldn’t equal financial hardship, in my opinion. I honestly don’t know the answer to the debt problem in America, but I think the consumerist and “Keeping up with the Joneses” attitude has a lot to do with it.

  5. I got my first credit card at the age of 20 and I actually so much out of it that made me financially responsible, though the start of it was a bit rough because I got myself into a great amount of debt. Overall, it’s really worth it and learned so much about financial responsibilities.
    Jayson @ Monster Piggy Bank recently posted..10 Creative Ways to Fund Your StartupMy Profile

  6. I think one of the biggest problems is the pervasive mindset that carrying debt is “normal.” While some people can use debt in a healthy and responsible way, most people think it’s unheard of to not carry any. Most people don’t know anyone who is debt-free. Now a days, I think that’s pretty strange.
    Chela @SmashOdyssey recently posted..Life Updates – It’s Been a WhileMy Profile

  7. Chris says:

    Hi! Thanks for the post. I am wondering about your sources. Thanks again!

  8. Laurie says:

    As soon as I hit 18, I rushed out and applied for my first credit card and I was not very responsible with it. I learned over time and now I am really frugal and my husband and I are debt free. I think one issue that I had back then was the fact that I had no concept of/was never taught about money, credit, spending, budgeting, etc. and had to learn as I went. Very interesting facts, thanks for sharing!

Speak Your Mind

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