Americans Have $17 Trillion of Debt! And 14 Other Surprising Debt Facts You Probably Don’t Know

Amidst rising prices and economic uncertainty, America’s debt has hit an all-time high. Consumer debt, which includes borrowing across all categories, recently topped a staggering $17 trillion during the first quarter of 2023.

Here are 14 surprising facts you didn’t know about debt in the U.S. that could help you learn to crush your debt.

Credit card debt is a burden on many Americans’ finances. A recent Experian study found that the average balance is $5,910. This sobering statistic highlights the prevalence of credit card debt nationwide.

You should always try to pay your card's entire balance each month. However, if you find yourself in credit card debt, there are methods to tackle it, like applying for a balance transfer card or personal loan.

In 2022, personal loan balances increased more than any other consumer debt type. Personal loans are convenient and flexible, whether you’re consolidating debt, funding home improvements, or covering unexpected medical expenses.

However, it's important to approach them responsibly and consider factors like interest rates and repayment terms to ensure they are the best choice for your financial situation.

Data from the Federal Reserve Bank of New York indicates that more people are struggling to pay bills on time.

A budget can help you track expenses and pay bills on time. You should also prioritize debt repayment and consider auto-payments to avoid missed deadlines.

Maintaining an emergency fund can also provide a safety net for unexpected expenses.

If you live in the Midwest, you may have an easier time avoiding credit card debt. According to the Chamber of Commerce, Midwest states have the lowest credit card debt in the country.

Many possible explanations exist, but these states typically have strong economies and lower living costs. The people are also known for their frugality, meaning they’re less likely to take on credit card debt.

The Chamber of Commerce also found the states with the highest average household income tend to have more credit card debt.

Maryland and Alaska, for example, had some of the country’s highest average credit card debt despite having larger incomes.

Top-income states typically also have higher living costs, making it more difficult for people to make ends meet.

According to Experian, families with four or more children carry 51% more debt than the national average. As family size decreases, so does the average debt balance.

These findings highlight larger families' financial challenges, who often encounter increased expenses related to childcare, education, and everyday living.

Larger families must prioritize budgeting, saving, and managing debt to ensure financial stability.

Typically, individuals with good or excellent credit scores can finance more debt, leading to more significant increases in their debt balances.

However, in 2022, average debt balances grew for people in all credit score ranges, indicating a widespread pattern of increased borrowing and debt accumulation.

Following a similar trend observed in 2022, foreclosures remained low in the first quarter of 2023. This shows that despite rising debt levels, people continue to pay their mortgages despite financial difficulties.

To prevent financial hardship and maintain a secure housing situation, it's crucial to pay down debt, track spending, and pay bills on time.

Usually, consumers charge celebrations and gifts to credit cards over the holidays. There's typically a decrease in credit card debt at the beginning of the year as people pay down those purchases.

While this sounds like good news, it may not be a good sign. The debt remaining the same during the first quarter of the year indicates that cardholders may be struggling to pay off their balances.

Local governments often issue municipal bonds to fund public works. While municipal debt is common, the deficit in many large cities is concerning.

New York City, for example, currently faces $56,900 in municipal debt per taxpayer. Although its debt has decreased in recent years, cities like New Orleans and Portland continue to see deficits grow.

Municipal debt may jeopardize workers' pensions when cities are under financial strain.

Taking on 25% more debt may sound alarming, but according to Experion, it aligns with previous generations.

The oldest of Generation Z turned 25 last year, so many are taking on new debt responsibilities like student loans, car payments, and mortgages.

Although they saw a rise in credit card debt, the substantial increase in overall debt can be attributed to simply hitting the milestones associated with adulthood.

As younger generations accumulate more debt, older generations’ debt balances are leveling off.

The amount of debt people carry usually peaks when they reach middle age. As they get older, they begin to pay that debt off, and their balances decrease.

This trend is in line with the flattening of debt that we are seeing now with older generations as many begin to tackle their debt balances.

In 2022, Gen Z had an average credit card balance of $2,854 — lower than other generations. The Silent Generation trailed closely behind with the next lowest average balance of $3,316.

Although their balances were lower, Gen Z’s credit card debt increased by 25.1% between 2021 and 2022. Millennials also saw a similar increase of 23.4%, but their balances were nearly double Gen Z’s.

In recent years, there's been a noticeable surge in debt levels. This upward trend can be attributed to the rise in inflation and interest rates.

Everyday necessities, like food and gas, have skyrocketed in cost since the beginning of the pandemic. Soaring home prices have also resulted in higher mortgage balances.

As a result, individuals are grappling with increased debt from daily expenses and larger financial commitments.

While the news of America’s debt hitting an all-time high is disconcerting, it may catalyze positive change. It prompts us to reflect on our financial habits to ensure we borrow and spend money responsibly and avoid throwing money away.

By individually committing to awareness and education about our finances, we can navigate our debt and work toward a brighter future.