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U.S. Household Debt On The Rise

Katie Jensen
Jan 11, 2022
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Household debt is on the rise with the average U.S. indebted household owing $155,622, according to NerdWallet Inc.

KEY TAKEAWAYS
  • American households hold $15.24 trillion in debt nationwide, increasing 6.2% from a year earlier. 
  • More than a third of Americans (35%) say their household financial situation has gotten worse over the past 12 months.
  • Median household income fell 3% over the past two years, while overall cost of living rose 7%.
  • Mortgage debt is 8.2% higher than the year prior, at an average of $207,861 per household with mortgages.

Household debt is on the rise, according to NerdWallet Inc., with the average U.S. indebted household owing $155,622. In NerdWallet's annual American Household Credit Card Debt Study, American households hold $15.24 trillion in debt nationwide, increasing 6.2% from the amount of household debt owed a year earlier. 

Americans who have been financially struggling over the past year point to lower income and higher expenses as the reasons why. More than a third of Americans (35%) say their household financial situation has gotten worse over the past 12 months. Within that group, 38% said it's because their household income decreased overall, and 36% says its because their household expenses increased overall. 

In 2020 and 2021, stimulus packages expanded child tax credit have helped Americans withstand hardship, according to the survey. More than three-quarters of Americans (78%) have received some form of pandemic relief since March 2020. The top uses for this extra money were to pay for necessities (43%) while others added it to their savings (43%).

Some Americans used their credit card as a lifeline during the pandemic, with 18% saying they relied on their credit card to pay for necessities and 17% saying they relied on them for emergencies.

"As the pandemic continues, many consumers are still facing financial hardships – and rising costs for life essentials like groceries, gas, and medical needs can be an additional hurdle," said Sara Rathner, a credit card writer at NerdWallet. "Leaning on a credit card to make ends meet can be costly, but during a difficult time, it can be a necessary fallback. Consumers whose finances have improved this year may be setting lofty money goals, but it's equally admirable to focus on the basics, like adjusting your budget or rebuilding an emergency fund."

Additionally, the study found the cost of living has been rising faster than income in recent years. Median household income fell 3% over the past two years, while overall cost of living rose 7%. This is a reversal of a decade-long trend in which income growth has exceeded inflation. 

The average household with revolving credit card debt, meaning credit card debt carried month to month, owes $6,006, down almost 14% from the year prior. As a result, consumers are paying less interest. Households that carry credit card debt will pay interest charges of $1,029, on average, this year, down 11% from the year prior. 

Meanwhile, mortgage and student loan debts are on the rise. Mortgage debt is 8.2% higher than the year prior, at an average of $207,861 per household with mortgages. Student loan balances rose 2.5% over the past year, to an average of $59,042 per household with student loan debt. 

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