How Much Credit Card Debt Does The Average American Carry?
Most people would agree that the amount of the average credit card debt in America has spun out of control. While credit cards make it possible for Americans to finance goods and services that they may not be able to afford immediately, in many cases this type of spending soon results in an overwhelming amount of debt. In fact, according to a report on consumer credit by the Federal Reserve, the current revolving debt held by American citizens is $852.6 billion, 98% of which is credit card debt. Considering that according to the Nilson Report, there currently are 576.4 million credit cards in circulation, the estimated credit card debt held by the average American citizen is approximately $15,788.
How This Credit Card Debt Affects The Average American
The main problem with credit cards is that they allow card holders to make purchases that they simply cannot afford. While a few purchases may not lead to a large monthly payment, many of these purchases will soon cost the card holder much more than they are able to pay. When also considering that for every $1000 spent on a credit card, the card holder will end up paying almost two and a half times that amount in interest when making only the required minimum payments, credit cards can easily lead to a large amount of debt. This, along with the tendency to overspend, is why the average American carries such a large amount of credit card debt.
Credit card debt is not only a problem that affects a large amount of people, but affects many of these people immensely. Having a low credit score because of failure to make credit card payments on time or because of the amount of debt held, can be an issue that affects a person’s ability to purchase a home, or even a vehicle. When choosing to responsibly manage credit card debt, it is first important to understand the average debt, in an effort to understand the possible consequences of irresponsible credit card use.
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