Debt is very much a part of life for most Americans, with overall U.S. household debt growing 11 percent in the past decade, according to a new report from NerdWallet.
The average household with credit card debt is carrying $16,061 in total balances. That’s just short of the high set in 2008, the eve of the financial crisis. The total average household debt is $132,529 when you include mortgages — that’s considerably higher than $88,063 in 2002.
Many Americans rely more on credit cards, and that’s a costly habit. Plastic represents the most expensive borrowing expense. Currently, the average credit-card interest rate is 18.76 percent and the average household pays a total of $1,292 in credit-card interest each year.
Total debt is expected to surpass the amount owed at the beginning of the Great Recession by the end of 2016. “Americans will soon owe more than they did in December 2007 — but that doesn’t mean another recession is looming,” NerdWallet states.
Household income has grown by 28 percent in the past 13 years, but the cost of living has shot up 30 percent in that same time period. Some of the largest expenses for consumers — like medical care, food and housing — have significantly outpaced income growth.
Some of the fastest-growing expenses are also the “most material in many Americans’ budget.” Medical expenses have surged the most: 57 percent since 2003. Food and housing have also increased significantly, 36 percent and 32 percent, respectively.