Banking, finance, and taxes

Americans' Debt Load Grows as Costs Outpace Income

Paul Ausick

Published: December 10, 2015 12:25 pm

Last Updated: August 10, 2020 3:57 pm

Over the past dozen years, U.S. household income has grown by 26%, while the cost of living has risen by 29%. And biggest increases in living costs have come in expensive areas for U.S. families: medical care, food and housing. Increases in these areas more than offset lower costs for clothing, transportation and recreation.

With outgo higher than income, debt typically rises as consumers have to figure out a way to make up the difference. Since 2003, inflation-adjusted household debt has grown 15% faster than household income. As large as that increase is, it’s less than a third the size of the increase in 2009 at the depth of the Great Recession, when household debt rose 42%, according to NerdWallet. The firm released its 2015 American Household Credit Card Debt Study on Wednesday.

The average American household now carries debt of $15,355 in credit card debt and $129,579 in total debt, according to the NerdWallet study. Total U.S. consumer credit card debt has reached $712 billion, and total consumer debt of all kinds has neared $12 trillion, which includes more than $8 trillion in mortgage debt, $1 trillion in auto debt and $1.2 trillion in student loan debt, in addition to credit card debt.

The NerdWallet study, which included an online survey of some 2,000 U.S. adults, uncovered other data points:

• Consumers underestimate how much debt they have. In 2013, lender-reported debt levels were 155% higher than borrower-reported balances.
• The average U.S. household pays $6,658 in interest payments a year, about 9% of total 2014 average income of $75,591.

The study takes a closer look at all these factors and includes a discussion of the impact of interest payments on household income.