by Matt Frankel, CFP | Feb. 21, 2020
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The average American's income is higher than a year ago -- but are they borrowing more money as well?
Credit reporting company Experian estimates that the average household income in the United States was $79,834 in 2019. The good news is that this is up from $77,762 in 2018, a gain of $2,072 or 2.7%.
The bad news is that Americans' debts are typically rising just as fast, or even faster, than their income. As one of the three major credit bureaus that tracks American consumers' financial information, Experian has firsthand insights into how much we owe. In the company's 2019 Consumer Credit Review, it revealed the average balance Americans owe on each major type of debt and how it has changed over the past year.
I won't keep you in suspense. Here's how much Americans owe, broken down by the type of debt.
|Type of Debt||Average Balance||Change From 2018 to 2019|
Data source: Experian. Parenthesis indicate a negative change.
To be fair, remember that these are the average balances per borrower. For example, not every American consumer has a mortgage -- in fact, only 36% of American consumers do -- but of those that do, the average balance is $203,296.
With this information in mind, here are some of the key findings and statistics from Experian's report for each major type of debt:
First off, there's no set definition of what is "too much" of any type of debt. One person might find a $30,000 auto loan to be too much, while another might be able to comfortably afford it. And it depends on the combination of debts you have -- in other words, a large mortgage payment is likely easier to handle if the borrower doesn't also have an auto loan and a pile of credit card bills.
And, the best course of action also depends on the type of debt. A personal loan or a balance transfer credit card with a 0% intro APR could be a great way to get credit card debt under control.
The bottom line is that the figures here are just the averages. Your debt may be too high for comfort, even if it's significantly less, and there's no time like the present to take steps to get it under control.
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