With so many people feeling financially strapped, living in debt has become common. As inflation looms, consumer confidence keep on going stay low, and debt is growing, with increases in all 50 states averaging at least 5%. A review of average debt by generation found that Gen Z experienced an almost 30% increase in average debt balance, the highest of any group. According to the Federal Reserve, US household debt hit a record high in the spring of 2021 at $14.6 trillion. This is an increase of more than 6% and the highest annual growth in more than a decade. In a 2021 CNBC report, it says the average American has $90,460 in debt, which includes all types of debt products.
It is worse in the north, where a recent study In Canada, household debt represents 186.2% of disposable income. This means that there is $1.86 of credit market debt for every dollar of disposable household income. About 40% have a mortgage, 29% have credit card balances, 28% have car loans or leases, 20% have lines of credit, 11% have student loans, and about 3% have personal loans . This inevitably seems to lead to future problems and surprise since many Canadians well marked on financial literacy.
There are many types of debt, from mortgages and auto loans to credit cards, personal loans and more, with home equity loans decreasing to some people’s surprise. Consumers explored more options from banks and online lenders while primarily maintaining credit scores. Like inflation takes his toll his credit card debt which looks be an ever growing concern.
The pandemic has undoubtedly had an impact, creating unemployment and reducing incomes. While stimulus checks have helped many keep their heads above water, households debt grew up. Debt is a ubiquitous (and often necessary) type of financing for many households. Often it is handled well by most, and credit score ratios reflect that. But recent events have thrown everything off balance, creating financial turmoil all over the place.