The average household has more credit card debt in 2016
Families in Florida who feel like their finances are worse off each year are not alone. A NerdWallet report shows that U.S. households are holding an increasing amount of debt, and income growth is not keeping pace with the cost of living. This year, the average U.S. household has $16,061 in debt, nearly the same amount of debt that Americans owed at the beginning of the Great Recession.
Though total debt owed by Americans may be higher this December than it was in December 2007, Americans are holding a smaller percentage of their debt in credit cards. Mortgages and student loans are now the biggest sources of debt, and that trend may be healthier, according to NerdWallet. While the average interest rate for credit cards is 18.76 percent, mortgages and student loans have interest rates that are 10 to 15 percent lower.
One of the reasons some Americans use credit cards is that they cannot cover their monthly expenses with their monthly income. NerdWallet has been tracking average household income and expenses for the past 13 years, and researchers have found some troubling disparities. While income has grown by 28 percent, the cost of housing has gone up by 32 percent, and the cost of food has risen by 36 percent.
If a household cannot afford to pay off their credit cards in full each month, they may end up paying thousands of dollars in interest each year. When interest is compounded, a credit card holder’s debt can quickly get out of control. An lawyer may be able to help an individual who is overwhelmed by these types of obligations to seek debt relief by filing for Chapter 13 bankruptcy.