It's your debt

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There’s a lot to like about credit cards: They help you build credit,  quickly pay for purchases and earn rewards. While credit card balances didn’t fall as much as they did in the previous year (14%), Experian found that average consumer credit card balances went down by 1.8% in 2021. The average U.S. consumer had $5,221 in credit card debt in 2021.  

Carrying a credit card balance is never a great idea because of accruing interest charges, but credit card balances overall are moving in the right direction. This type of debt saw the largest drop from 2019 to 2020, with the  average debt in America for credit cards decreasing by 14 percent, but it’s still continuing in a downward direction.

The decrease in credit card debt is likely due to multiple factors. One of the main contributing factors is that consumers have been able to pay down their debts using relief programs or stimulus payments.

Personal loans allow you to borrow a lump sum of money and pay it  back in installments over time. Consumers can use the funds to cover nearly any expense, from debt consolidation to home improvements and  emergency expenses.

Nearly a quarter of U.S. adults have this type of debt, and personal loan average American debt stands at $17,064. This amount represents a slight growth from the previous year, but borrowers continue to be careful as they wait to see how the economy recovers from the pandemic.

Most car shoppers don’t have the cash to pay for a vehicle upfront, so they take out an auto loan and pay down the balance over time. As the second-most popular type of  credit, two-thirds of U.S. adults have at least one auto loan. The average debt in America for car loans is $20,987, increasing by 6.7  percent from 2022. This increase is a reflection of auto price increases  throughout the country.  

Student Loans help millions of Americans pay for higher education every year. The  average balance for this type of debt was $39,487 in 2022, representing  just a 1.8 percent increase from 2020. The continued pause on interest  payments due to the coronavirus pandemic is the main contributor to  slower growth in this debt type. The current interest rate pause expired on December 31, 2022, which impacted Americans’ student loan debt averages.  

 Home equity lines of credit (HELOCs) allow homeowners to borrow money using their homes as  collateral. The average American debt for HELOCs is $39.556, decreasing  by 5.7 percent from 2022.  Americans paid off the balances and abstained from taking out new HELOCs  this year, contributing to the decrease. As interest rates increase, Americans may wait to see how the housing market reacts before relying on their home equity to fund projects or major renovations.

When it comes to how much debt the average American has, mortgages  represent the largest outstanding debt in the U.S. The average mortgage balance stands at $220,380.

This 5.9 percent increase in the mortgage balance average is partly  due to increasing real estate prices. However, due to record low interest rates, there was also an incredibly hot refinance market, with a 33 percent increase in refinances in just the first half of 2022.

Throughout 2022, interest rates have increased, and the housing market has already begun to cool in many areas. These changes may impact mortgage debt over the next year.

From 2022 through 2023 so far, Americans are still financially recovering from the coronavirus pandemic. Increased interest rates and  inflation are contributing to uncertainty in the economy. Slowed growth in most types of debt shows that Americans are careful with their money  as they wait to see what will happen with a change housing market and an uncertain economy.

No matter what happens, it’s always a good idea to stay on top of  your debt. If you don’t already have a plan for managing your debt, make a plan to speak to a credit adviser. They may be able to help you before sending a debt to collections or worse getting a judgement and having your wages garnished or a lien on any of your assets.