Borrowers in 13 states now owe more than they make in a year and the average household pays a dollar out of every $5 in income just to make monthly payments to debt.
The average debt-to-income of 91% shows it would take nearly a full-year’s income to pay off household debt for many Americans.
You could argue that historically-low interest rates mean debt doesn’t cost as much as it used to so why not get a loan? A $10,000 loan at 5% only costs about $500 a year in interest.
Americans are tired of waiting for wages to increase to be able to enjoy the shopping they did in the past. Interest rates on everything from car loans to credit cards are still low, so why not get a loan to make up the difference?
Borrowing only when you must or when it makes financial sense. 1. Borrowing to buy a home offers rewards beyond the money and you can deduct the interest from your income for taxes.
Most businesses borrow to invest and buy equipment. Getting a loan makes sense if you can turn it into a higher rate of return and business growth.
The total debt the average American owes is bad enough but within that figure is a whopping $16,943 in credit card debt.
If you consider the average credit card rate is 16% and well above 20% for bad credit borrowers, that means the average American is paying around $225 a month in interest.