Debt is as American as apple pie. Whether we’re taking out loans to pay for our dream home, get behind the wheel of our dream car, or go back to school to earn a degree, we’ve made borrowing a national pastime.
Eighty percent of households in the United States have debt, a 2015 report from the Pew Charitable Trusts found. Most borrowed to buy a house, but more than 30% owed money on their credit cards, and 21% had student loans. All-in, the average balance was $67,900.
The tough truth is that getting by in America today without borrowing money is tough. Most people can’t afford to pay for college or a house in cash, so they turn to loans. But many fear that Americans aren’t being smart about how they use debt. Eighty-five percent of the individuals that the Pew polled believed people were using debt to live beyond their means, and 79% said they didn’t think Americans were responsible borrowers.
The evidence, unfortunately, suggests those debt skeptics might be right. From the trillions of dollars we owe on student loans, credit cards, and car loans, to the 300% interest rates charged by payday lenders, here are 15 truly frightening facts about debt in America.
1. Americans are $12.58 trillion in debt
When you add up all the money Americans owe on their mortgages, student loans, cars, credit cards, and other lines of credit, the sum is $12.58 trillion dollars — more than the entire gross domestic product of China. Our total debt grew by $226 billion (1.8% increase) in the fourth quarter of 2016 alone, according to the Federal Reserve Bank of New York, and is now just a hair below the peak of its 2008 third quarter crash of $12.68 trillion. Mortgage debt accounts for more than two-thirds of what Americans owe.