It has been revealed that many American households are creating mounting levels of debt, as income fails to keep up with spending. According to a new report, which collates data from the Census Bureau and the Federal Reserve Bank of New York, the average outstanding credit card balance per household is now $16,061.
The last time credit card debt was this high was in 2008. In 2002, the average household debt, when taking mortgages into account, was $88,063. This has now soared to $132,529. The figure is unsurprising when the cost of living is taken into account - this has increased by 30 percent during the same period. Income levels have grown by only 28 percent, and that two percent discrepancy has affected many families.
To bridge the gap between expenses and income, many Americans have turned to credit cards. This is one of the costliest forms of borrowing, however, with the average interest on credit card debt currently at 18.76 percent, resulting in around $1,292 of interest being paid by families every year.
There is some good news, though: Education costs no longer outpace income, having increased by just 26 percent since 2003. Although student loan debt has rocketed by 186 percent over the last ten years, growth has now begun to slow. Between September 2015 and the same month in 2016, growth increased by only 6 percent - the lowest figure since 2003. Find out quickly at what rate you can refinance your student loan.
With Americans having vast amounts of debt to handle, it is more important than ever to keep an eye on personal finances, money management, and debt repayment. Doing this could save large amounts in credit card fees and interest costs. If you want to settle outstanding debts for less than what you owe, try our debt settlement tool.
If you want more credit, check out MoneyTips' list of credit card offers.