The Cost of High Debt
Currently, the average U.S. credit card debt per household is a whopping $15,788. The average APR on credit cards with a balance is 14.48%. The total U.S. revolving debt is $852.6 billion of which 98% is made up of credit card debt. Total U.S. consumer debt is $2.42 trillion. U.S. credit card default rate is 13%. (Data as of 2010). Undergraduate college students are currently carrying record-high credit card balances (average $3,173). College students graduate with an average credit card debt of over $4,100 with almost $20,000 in total debt. Personal bankruptcy in the U.S. totaled 1,538,033 in 2010, up 14.4% from 2009.
Living with debt has become the American way. We have been programmed to live with debt. Many people graduate with huge loans, buy a car and home with a loan, and buy things they don’t need (most of the time) with credit cards and home equity loans. Many Americans, even with good paying jobs, end up living pay-to-pay check.
Many creditors report that people owe too much because they are irresponsible spenders, however, recent studies have shown that U.S. wages have been flat, while costs of basic housing, medical care, education, and food have increased. No all U.S. consumers are in debt because they are not responsible; they are in debt because there income has not kept up with inflation. In a sense, they salary has been going down over the years. Because of this consumers haven’t reduced their expenses to match raising living costs and their stagnant income.
Unfortunately, many people don’t know they are in trouble before it’s too late because they don’t track their financial status and if they sense trouble, they just ignore it or don’t know what to do. It is vital that consumers track their financial status regularly so they don’t fall into a financial trap.