Credit Card Debt Young Adults - Maybe you're wondering where you stand compared to America's average debt, or maybe you're just curious about our nation's financial situation. Either way, the numbers and research we've gathered here from a variety of sources will shed light on the current indebtedness of American households.
As American household net worth rises (by $141 trillion by the summer of 2021), so does debt.1 Total personal debt in the US is at an all-time high of $14.96 trillion.2 The average American debt (per US adult ) is $58,604 and 77% of US households have at least some type of debt.3, 4, 5
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. In other words, debt is owed to someone for any reason. If you have debt, you've likely agreed to repayment terms, and those terms mean specific payments over specific periods of time until the debt is paid off—usually with interest (the extra amount the creditor charges you for borrowing money).
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Some of the most common types of debt in the United States include credit cards, student loans, auto loans, equity lines of credit (HELOCs), and mortgages. While each affects Americans of all ages, some age groups are affected more than others - so we'll look at not just US totals and averages, but debt across multiple age groups .
Let's look at the grand total of US debt and average debt per household in five categories.
Eight out of 10 adults in the United States have at least one credit card, and 45% of American households carry a balance (meaning they don't pay their credit cards down to zero each month, so they have debt on credit card). ).6
10The average credit card debt per household with this type of debt is $14,241, with the total in America coming in at $787 billion.11
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The average APR (annual percentage rate or interest rate) on credit cards is 17.13%.14 And the 55 million households with credit card balances pay the average interest rate.
Think of it this way: if you multiply 17.13% by the $787 billion Americans owe, that's about $134.81 billion the credit card companies will earn in interest alone.
You may hear credit card holders say they don't carry cash, but more than half of them do. The Federal Reserve shares that only 48% of Americans with credit cards pay their bills in full each month.15 The other 52% take out loans and increase those interest rates and the $787 billion statistic.
Total student loan debt in the United States is currently $1.57 trillion, with each borrower averaging $38,792 (in summer 2021).16
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17The fastest growing debt in the United States (growth has increased nearly 157% since the Great Recession), student loans account for 11% of the nation's total debt.18This is the second highest percentage, right after mortgages.19
Student loan debt for Americans ages 18 to 29 is $333 billion. And while student loans account for about 2% of the debt of Americans at age 70, they collectively owe $27 billion.20
Young adults say the burden of student loans prevents them from making major financial and life decisions. For example, 40% put off investing for retirement and 47% put off buying a home. And 21% are even waiting to get married because of student debt. 23
Total auto loan debt in the United States is $1.42 trillion.24 Thirty-seven percent of households in the United States (about 45.4 million households) have this type of debt, averaging $31,142 per family.25
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So how much do these people pay each month? Well, the average monthly car payment is $577 for new cars and $413 for used cars.28
AHELOC (home equity line of credit) is a loan that allows you to borrow money against the current value of your home, using the equity you have built up in your home as collateral. In other words, you're giving up the equity you've earned and trading it for more debt.
There are more than 4.7 million HELOCs (a total of $349 billion) in the United States, with the average US household with this type of loan owing $73,685.29.
Older Americans have the highest percentage of HELOC debt. HELOCs account for less than 1% of the debt for people ages 18 to 29 and 1% of the debt for people ages 30 to 39, but that percentage rises to 6% for people over the age of 70.31
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For most people, housing is the biggest monthly expense. This means they pay a larger percentage of their monthly income toward rent or mortgage than any other budget category (think categories like utilities, groceries, insurance, etc.).
Americans with mortgages pay an average monthly payment of $1,595.34 Representing 70% of all US debt, mortgage debt has peaked at $10.44 trillion.35 Forty-two percent of households have mortgage. (That's more than 51.5 million US households in total.) And the average mortgage debt in our country is $202,454.36
So we've broken down some of the typical US debt totals by age, but here's an overview of debt totals and averages by age. Note: These averages include all US adults, with and without debt.
Today we will look at total debt for each age group broken down in percentage by type of debt (as of February 2021). Note that younger Americans have a higher percentage of student loans, but older Americans have a higher percentage of mortgage debt.
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COVID-19 has had and continues to have many effects on America's finances. (That's probably the understatement of the year.) Businesses closed and job losses became common. If you haven't been directly affected by these changes, chances are you know someone who has.
Within the rollercoaster of changes in 2020, debt sums have not been left untouched. And while the changes we're going to share aren't necessary
You'll notice that the largest percentage increase through COVID is in mortgage debt, at 5.1%.
On the other hand, you can see that credit card debt decreased by 11.7%, from $927 billion at the end of 2019 to $819 billion at the end of 2020.42
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The Consumer Financial Protection Bureau questioned this denial. In their research, they suggest that one of the reasons for the decline in credit card balances in 2020 is because consumers are spending less. The Bureau sought evidence to support another theory - that those with secure jobs might
On debt from those in financial trouble. The Bureau explained that it could not test this idea directly. But in an indirect test, they found that "the decline in average credit card balances held true for all groups" in their data.43
In other words, throughout 2020, credit card debt seems to be falling flat – regardless of a consumer's employment status.
Credit card debt fell again in the first quarter of 2021, falling to $770 billion. But by late summer 2021, it will rise again to $787 billion. Note below that mortgages, auto loans and credit card debt rose to over $300 billion combined in Q2 2021.44
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The changing economy in 2021 shows an increase in costs, spending and debt in at least three major categories of debt.
If you're in debt, these numbers show you're not alone. However, if you are part of those statistics, you don't have to stay there. You don't need to keep spending $577 a month on a car loan (for a car that loses 60% of its total value in the first five years of its life). this should be your quiet retirement year.
Listen, your income is your biggest wealth building tool. But when you are in debt, you cannot build wealth, because you are spending part of it
Once you're out of debt and finally get your income back - all of it - then you can move on with your finances. And paying off any debt you have probably won't take as long as you think.
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It may not be pretty, but it has to be done! People are sometimes so scared of this first step that they stop there. Nope. Can you do that?
Our own Ramsey Solutions survey found that nearly half (46%) of Americans say their debt level creates stress and makes them anxious. Yes, looking your debt in the eye can be difficult, but when you finally face the facts, you can come up with a plan to attack it head on. you are on the way
Before you tackle your debt, make sure you have $1,000 stashed away as an initial emergency fund. Why? While you're paying off debts, life happens – we're talking the flat tire, the leaky fridge and the unexpected medical bill. If you don't have money saved up to pay for emergencies, you'll be tempted to take out a credit card and get further into debt.
Then pay off all non-mortgage debt, from smallest to largest, using the debt snowball method. Don't argue with our math and ask about interest rates. The goal of the debt snowball method is
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. You'll pay the lowest payment on all but the smallest loan - that's what you're after.
When it's gone, you've put all the money you're playing with
Debt Repeat until you are out of debt. You'll get a quick win along the way. And those quick wins will keep you going.
Say it again: you are
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