4 Things About Consumer Debt You Need to Know
Are you struggling with consumer debt? Many Americans have more debt than they know what to do with.
According to Experian, a data analytics and consumer credit reporting company, the U.S. consumer debt balance in 2023 was $17.1 trillion. That’s up 4.4% versus $16.38 trillion a year prior.
It adds that the top five debt categories include, in order, mortgages, home equity lines of credit, student loans, auto loans, and credit cards. While the year-over-year increase of 4.4% is lower than the 7% increase from 2021 to 2022, it increased nonetheless. And that can spell trouble if you’re struggling with debt and see no light at the end of the tunnel.
What follows are four things about consumer debt you need to know.
- Mortgage Debt Tops the List
It’s probably not unexpected to see that mortgage debt is the leading category in consumer debt. Experian notes mortgage debt makes up close to two-thirds of the entire consumer debt tally.
According to Experian, mortgage debt grew 3.2% to reach $11.6 trillion in the third quarter of last year. It adds that high mortgage rates and a limited housing supply dissuaded existing homeowners from putting their homes up for sale.
- Auto Loan Debt Is Climbing
According to the Federal Reserve Bank of New York, auto loans increased in the second quarter of this year by $10 billion to reach $1.63 trillion. Everyone remembers the global chip crisis. It started because of pandemic-related lockdowns that shut down factories producing microchips used in the automotive industries.
While the pandemic is over, the chip crisis isn’t. No, it’s not as bad as it was before. But the impact still lingers. That’s one reason cars, whether new or used, are so expensive. According to Bankrate, the average monthly payment for a new vehicle is $730. That amount drops to $520 for a used car. Whether you get a car loan for a new or used vehicle, the costs will add up over time — especially for longer-than-usual financing contracts.
It’s always better to pay cash for a vehicle than enter a five-, six-, or seven-year financing pact.
- Credit Card Balances Are Up Billions
The Federal Reserve Bank of New York adds that credit card balances across the country climbed by $27 billion to reach $1.14 trillion in the second quarter of 2024.
According to one source, the average credit card balance is approximately $6,501. Consumers from Generation X have the highest balances, with an average of $9,123, while people from Generation Z have the lowest balances, with an average of $3,262. It’s far too easy to see credit card bills go up. And if you’re undisciplined or lose your job and can’t pay, you could be in major debt fast.
- Southern States Lead the Pack for Growth in Average Consumer Debt Balance
Every state saw increases in the average debt balances last year. But the Southern states saw higher-than-average increases. According to Experian, North Carolina, Alabama, Florida, South Carolina, Oklahoma, and Texas saw total debt balances of 4% or greater. The national average, meanwhile, was 2.3%.
These are four things about consumer debt in the country that are important to know. It’s essential to understand that there’s help if you’re struggling with debt. You might feel like a hamster on a wheel — moving fast but going nowhere. But there are ways to slay the debt albatross.
It could be worthwhile to contact a bankruptcy lawyer to determine if a bankruptcy filing is the right option for you. That’s one of many options on the table, and you should carefully consider them all. You might decide, after consulting a bankruptcy lawyer, that a filing is the best option.
