In April, consumers only added another $100 million in credit card debt. This sounds like a lot, until you realize it’s just a 1% increase to the $849.1 billion they already owed. Even that’s much, much less than the $1 trillion owed in 2008. Overall, it’s a healthy sign for a country that tried to attain the American Dream on the back of plastic.
Instead, families are wisely taking advantage of low interest rates to take out auto and school loans. This “Non-revolving” debt rose 6.4% to a new record, $1.97 trillion. Of this, nearly a third ($567 billion) was held by the Federal government for education loans. All told, Americans now owe a record $2.82 trillion in total consumer debt. (Source: Federal Reserve, G.19 Release, June 7, 2013)
On average, Americans now owe a whopping $6,903 in credit card debt. Although this isn’t as high as prior to the recession, and that’s a good thing, it’s still a lot to owe on a high-interest account. Add that to the $16,200 owed by the average household in school and auto loans, and you can see that White House is not alone in needing to reduce deficit spending! (Update: This estimate is based on 123 million households or 315 million total people / 2.55 persons per household.Source: U.S. Census, 2012 Estimate; Average Household Size)
What It Means to You
The only good news is that more households are using debt to buy the opportunity to achieve the American Dream through education. True, many students get degrees that aren’t helping them find jobs, but research shows that education is highly correlated with wealth.
How to Reduce Credit Card Debt
- A Life Preserver in a Sea of Debt
- Making a Plan to Reduce Credit Card Debt from the About.com Guide to Credit, LaToya Irby
- More Resources for Reducing Credit Card Debt from the About.com Guide to Beginners Investing, Joshua Kennon
- Consumer Financial Protection Agency
- Consumer Credit Statistics
- Consumer Spending Trends
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