There’s good news and bad news about household debt

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Debt levels are high but the payments as a percentage of income have been a lot higher

As inflation rose over the last three years, many consumers resorted to putting some daily expenses on credit cards, extending their balances. That’s been partly responsible for pushing household debt levels to record highs.

But credit cards actually make up a relatively small percentage of household debt when compared to mortgages, car loans and student loans. ConsumerAffairs researchers did a deep dive into the data to see who owes what.

Total household debt in the U.S. reached $17.5 trillion at the end of 2023. However, debt payments as a percentage of personal income stood at only 9.8%. That’s lower than historical averages.

ConsumerAffairs’ analysis of Federal Reserve data shows Americans had run up $1.13 trillion in credit card debt by the end of 2023. That compares to $12.25 trillion in mortgage balances and $1.61 trillion in car loans.

When it comes to credit cards, the concern is less about the total balance and more about the interest rate borrowers pay. The average credit card interest rate is a record 27.90%, according to Forbes. A rate that high makes it very difficult to pay off the balance.

Demographic factors

The amount of debt a consumer has accumulated can vary significantly by age, race and other demographic characteristics. If you have children you are likely to have more debt.

The consumer organization estimates that consumers with children have 14% to 51% more total debt than the national average. They also report that the lowest earners pay significantly more of their income toward debt than those in higher income brackets.

People between the ages of 40 and 49 have the most debt while those 18 to 29 years old have the least. People who are between 50 and 59 and nearing retirement have the second-lowest amount of debt.

And, none of this factors into the debt owed by the United States government, which has now reached a record $34.6 trillion. Given the total population of the U.S., that means the average citizen’s share of the national debt is more than $100,000.

You can find the full study here.

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