Not only is the US government in debt, but many of its citizens are in significant debt as well. Economists announced that credit card debt for Americans has now reached a new height of $1.02 trillion.
Matt Schultz is a senior industry analyst at CreditCards.com. He says, “This record should serve as a wake-up call to Americans to focus on their credit card debt.” He adds, “Even if you feel your debt is manageable right now, know that you could be one unexpected emergency away from real trouble.”
While I am talking about credit card debt, let me also talk about other debts that Americans currently hold. The New York Federal Reserve recently released a report that estimated the collective US household debt at about $12.73 trillion. Once again this is a record and surpasses the previous amount back in 2008 during the recession.
The report also provides some context to American debt. Housing-related debt is down nearly $1 trillion since the 2008 peak. However, auto loan balances are $367 billion higher, and student loans are $671 billion higher.
In the past, we have talked about the growing problem of student loan debt, so let me focus a moment on auto loan debt. Americans struggle with this form of debt, especially because there are often higher interest rates. Millions of these loans are in delinquency and many people report taking out a loan with a repayment period longer than the time they planned to own the vehicle.
In my book, Making the Most of Your Money in Tough Times, I talk about the dangers of debt. Proverbs 22:7 says, “The rich rule over the poor, and the borrower is a servant to the lender.” So many Americans are enslaved by debt.