The growing level of consumer debt in the United States is continuing to become a larger and more significant problem. While most people are aware that consumers in the United States are in too much debt, not everyone knows what this debt is made up of.
Consumer and household debt in America is broken into a variety of categories, some of which is considered good debt and other types is more concerning. Check out this infographic published by Debt Reviews for the big picture:
Without a doubt, the most significant form of consumer debt in the country is mortgage debt, which totals about $8.8 trillion, or $178,000 per household. Overall, this is considered a good type of debt to have as it secures an asset and comes with a relatively low interest rate. However, people need to be cautious about mortgage debt and will need to avoid overextending themselves when they take out a loan.
One of the fastest growing types of debt in the country is student loan debt. Today, the average household debt in America is $47,000 in student loan debt and the total consumer debt in the country totals $1.38 trillion. The more concerning part of this debt is that the cost of higher education is continuing rise at a rate faster than inflation and many graduates are unable to find jobs that pay enough to pay off this debt faster.
Buying a car is a big purchase that often requires the use of an auto loan. The average household in the country has more than $27,000 in auto loan debt with a total debt loan in excess of $1.2 trillion. While auto loan debt in America an be inevitable, people should avoid spending too much on cars as they are depreciating assets.
The increasing level of credit card debt in America is very concerning. Overall, the average household in the country has more than $15,000 in credit card debt. With interest rates in excess of 20%, paying off these balances can be a challenge. Consumers need to take proper steps to avoid overspending and accumulating this type of debt.
Overall, there are many reasons why this type of debt is increasing. Most consumers attribute their debt to poor spending habits. However, a larger percentage of consumers also attribute their high levels of debt to having to pay for emergencies, such as managing a period of unemployment, paying for home repairs, or unexpected medical bills that suddenly come up.