Borrowing Habits Are Generating Interest

Some interesting statistics about current borrowers and trends in lending

07/29/2014

Credit. It’s as American as apple pie. Without the ability to borrow and operate on credit, the U.S. economy would grind to a standstill. Consumers, businesses small and large, and all levels of government depend on loans for day-to-day functions and long-term purchases. Check out some of the surprising facts about credit use in the United States, and see how you stack up.

You can’t say “credit” without thinking of credit cards, and there’s a reason why. The average American cardholder — not household, but individual cardholder — has no fewer than eight credit cards. The average credit card debt for each cardholder is just under $6,000, and as of this past February the total amount of outstanding revolving debt — the majority of which is credit card debt — was just shy of $850 billion.

A small group of consumer households carrying a very high amount of debt skew the numbers significantly. Average household credit card debt comes in at just over $7,000 when outliers are excluded, but when all households are included, this number more than doubles to more than $15,000.

Either way, there’s clearly a demand for credit. Though some lessons were learned from recent years’ financial hiccups, lenders are still happy to fill qualified borrowers’ desires. Major depository institutions hold the vast majority of revolving debt, with finance companies coming in second place with less than 8 percent. The supply of credit by these companies is what keeps the engine of our economy running.

Home and car ownership — or at least new car purchasing — wouldn’t be a possibility for many Americans if not for the availability of credit. The average car loan is approximately $28,000, with buyers typically putting 20 percent or less down. The average homeowner also carries close to $150,000 of mortgage debt, though this figure is highly dependent on locality.

In total, American consumers currently owe $11.19 trillion in debt. Of this, $7.9 trillion is in mortgages, but a whopping $1 trillion (approximately and depending on the source you consult) of this debt is student loan debt. The federal government is far and away the biggest holder of student loan debt, with around $864 billion in student loans still outstanding. The average college student today has more than $32,000 in student loans to pay off and will likely take more than 30 years to do so.

Student loans are also the fastest-growing segment of American consumer debt, accounting for more than 90 percent of the total debt increase from 2010 through 2012. Other areas of debt actually shrank from 2008 through 2011, and increased only slightly in 2012 and so far in 2013. This trend is unlikely to change course dramatically even as the economy fully recovers.

Credit makes the world go around. While “debt” is often seen as a four-letter word, used effectively it can mean the difference between a life well lived and just getting by. And for most Americans, it isn’t going anywhere anytime soon.

Contact us and let us guide you through the process, and we’re here to answer any questions you may have.

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