According to recent information published in reports, more than 300 million Americans are indebted to creditors; the pandemic’s impact is responsible for the bulk of this record high. According to experts, it is the highest annual spike in over a decade. Credit can be good for those trying to build their credit history and score, which is beneficial when applying for a mortgage or business funding. However, many people get into trouble by accumulating more credit than their income. This is causing their debt-to-earnings ratio to skyrocket, eventually putting a strain on their finances. The U.S. demographics of debt are a good starting point to understand debt further.
The actions above are soon followed by harassing letters and calls from debtors. And there’s also the dreadful feeling of being in over your head, unable to see your way out.
However, experts state that simply understanding credit and loans based on statistics can help you see how they relate to your situation. You can later use this knowledge to change your course from indebtedness towards financial freedom.
In the meantime, legal debt consolidation can help you manage your current bill payments while also gradually helping you get pay off all your loans. But for now, here’s a breakdown of the U.S. demographics of debt to see where your situation fits.
Here’s an overview of the demographics of debt in the U.S., with data to back it up.
Age and Credit
Recent statistics show that the average American has over $90,000 in bills from auto loans, credit cards, mortgages, and more. These numbers super exceed the average income for most generations.
The statistics further provide a breakdown of the average American credit owed by age group in 2020: $16,043 for ages 18 to 23, $87,448 for ages 24 to 29, and $41,281 for ages 75 and above. However, those 45 to 55 and 56 to 74 topped the list with average outstanding loan amounts of $140,643 and $97,290, respectively.
Reports show that other factors besides age and the pandemic play a role in how much credit a person takes and even their ability to repay it. These factors include income, education, family type, ethnicity, and gender.
Income and Credit
A survey of consumer finances shows that those with higher incomes and assets racked up the most credit card bills in 2021, which is most likely because they have the means to repay it quickly. Those in the top percentile of wage earners had an average owed credit card amount of $12,600 with an annual income of over $289,000.
Meanwhile, those with an average annual income of $152,000 to just under $300,000 in the same year came in at close second with an average credit balance of $9,780.
Income earners with annual totals of $151,999 to $95,000 had $6,990 in average loans. Those with $94,999 to $59,000 in annual income racked up an average of $4,910 in bills. On average, families with a household income of $58,999 to $35,000 had $4,650 in credit.
Finally, people with an annual income of $34,998 and less only had an average of $3,830 worth of credit. This low credit is perhaps due to low income, preventing them from qualifying for a loan.
Education Level and Credit
ValuePenguin data shows that college degree holders have a higher average of credit card loans than those without higher education. This suggests that the higher a person’s education level, the greater their income and ability to take on credit.
Meanwhile, reports of education loans show that the average owed amounts correlate to the potential wage earning of the degree. The highest bulk of current student loans belongs to 35-year old borrowers.
One report shows that, as of 2019, the majors with the highest earnings-to-debt ratio include Engineering, Chemical Engineering, Computer Science, and Physical Sciences. The same report shows that the higher the degree, the more the average student loan borrowing also tended to be, which, too, is believed to be due to the increased earning potential of the degree.
The loan type also tended to dictate the average education money owed per person. The outstanding private student loan balance accounts for just 7.89% or $136.31 billion of the total U.S. student loans owed compared to the federal outstanding student loan balance of $1.61 trillion. However, this may be due to the strict qualifications private loans have that limit the number of people who qualify. Research shows that they are mainly used as a supplement after federal aid has kicked in.
Of the outstanding student loan debt, the average student loan debt breaks down to about $57,520 per U.S. household. However, studies further show that graduate school’s average school loan balance is just over $71,000.
But no matter the degree, the U.S. Bureau of Labor Statistics shows that college graduates on average typically earn more than those without a degree, which, for many people, justifies them taking on student loan debt.
Single Vs. Married Households and Credit
Reports show that the average income for singles in 2020 was $72,300. In contrast, the median general population average household income is $90,500. Meanwhile, reports show that married couples with no children had approximately $4,727 in savings, while the average single person aged 35 to 44 with no children had only $2.729 in savings.
When it comes to single vs. married households and credit, reports show that single people are also more likely to stay in debt than married couples, which may be because they have more leisure time.
Other reports showed that over 40% of married couples also considered themselves financially secure, while only 29% of singles reported feeling financially secure.
Minorities and Credit
Research suggests that ethnicity also plays a role in the average American debt accumulation. That’s because certain ethnicities tend to earn more in general, enabling them to take on more credit.
For instance, one report shows that the average income for black families was $46,073 in 2019 compared to Hispanics’ average annual income of $56,113. Another report shows that black people’s average credit card balance was just $3,940, while Hispanics’ average was $5,510. A study published by the Federal Reserve indicates that Hispanic families also had a higher median family net worth of $36,100. Black families’ average family net worth of $24,100. In other words, Hispanic families have more borrowing power.
On the other hand, white families had a median family net worth of $188,200. All other race respondents had a higher wealth than black and Hispanic families but less than white families.
A report on student loan statistics shows that white and Asian college graduates had comparatively less school financial credit. This may be partly because they took out less credit, resulting in a lower outstanding student loan balance.
They also tended to pay off their credit balances quicker and struggled less to make their monthly payments, which may also be due to the lower amount of money they owed.
Gender and Credit
Recent data shows that women have more credit than men, even though they make less money on average; this could stem from various factors, including their career choice and more.
The same study shows that women also have less money in savings and retirement savings, which could also be due to wage disparity.
Statistics show that women hold 58% more student loans, and they also have an average loan amount that is 9.6% higher than their male counterparts one-year post-graduation.
You Have the Demographics of Debt – Now What?
Most likely, this overview of the U.S. demographics of debt has left you thinking about your finances and how you can best try to avoid excessive debt. If you find yourself in over your head with credit cards and loans, you can get legal help to make your loan payments more manageable. Enrolling in the program lets you combine your separate loan payments into one single and reduced credit payment. Since it’s just one payment, it also helps you save on interest.
We will also assess your situation and develop a repayment plan that you can afford. There are different solutions to suit your specific needs. You can also get your loan consolidated without a loan reference or a high credit score.
In the meantime, remember the most significant lesson: the more money you owe, the lower your net worth. This makes you more vulnerable to missed or delinquent payments due to a loss or reduction of income. If you’re taking out credit, be sure your net worth exceeds your total loan balance, so you can quickly pay it off.
Consumer Protection Group understands the needs of clients in debt. We educate the public on managing debt because we’ve been there. We know just how daunting it is. Contact us so we can work together towards your financial freedom!