I recall watching an episode of “Thea,” a sitcom that aired in the early ‘90s. In this particular episode, there was this guy shooting his shot at Thea. He was telling her about the big house he owned, the fancy car he drove, the places he’s been to. His goal was to impress Thea with his status and worldly possessions. After laying out to her what he brought to the table, he asked Thea, “How does that sound to you?” Thea quipped back, “It sounds to me that you have a lot of debt!” I don’t think that was the response he was looking for.
For the average person, as long as they’re able to make their monthly payments on time, they don’t see themselves as having debt problems. Remember this; financial problems don’t show up in your ability to pay your bills on time. Financial problems show up in your inability to consistently save and invest. The inability to consistently save and invest forces you to always have a need to borrow money when unexpected emergencies happen, when you want to travel, when you want to make large purchases, when Christmas comes, or when it’s time to retire. We refer to this as the debt cycle.
Would you like to know if the debt load that you’re carrying is above average? Sure you would! When it comes to personal debt, how do you rank among the average American? This is one category where below average earns you a passing grade.
Credit Cards: As of 2024, the average credit card balance in the U.S. is around $6,568 per person. The average monthly credit card payment, based on minimum payment calculations, is approximately $110 to $200, depending on factors such as balance size and interest rates.
Regarding repayment habits, about 35 to 40 percent of cardholders pay off their credit card balances in full every month, while the remaining majority carry some level of debt, often incurring interest charges.
Student Loans: As of 2024, the average student loan balance in the U.S. is approximately $37,056 per borrower. However, the balance can vary significantly based on the degree level and type of institution attended. Graduate and professional degree holders typically have much higher balances.
Regarding monthly payments, the average varies based on the repayment plan and interest rate. On a standard 10-year repayment plan, the typical monthly payment is around $350 to $400, but it can range widely depending on factors like loan balance, interest rate, and income-driven repayment plans.
Car Loans: As of 2024, the average car loan balance in the U.S. is approximately $40,634 for new vehicles and $26,073 for used vehicles. The average monthly payment for a new car is around $735, while for a used car, it is about $523. These figures have risen due to increasing vehicle prices, higher interest rates, and longer loan terms, which have become common practices for making car payments more manageable. Interest rates, credit scores, and loan terms can significantly affect these payments, with borrowers with better credit typically securing more favorable terms.
Personal Loans: As of 2024, the average personal loan balance per borrower in the U.S. is approximately $11,829. This represents a steady increase over recent years as personal loans have grown in popularity, particularly for debt consolidation and covering unexpected expenses. The average monthly payment on a personal loan can vary widely depending on factors like the loan amount, interest rate, and term, but typically ranges between $200 and $400.
For borrowers with strong credit (680 and above), interest rates are more competitive, making monthly payments more manageable, while those with lower credit scores often face much higher rates, leading to larger payments. On average, personal loans are used most commonly for debt consolidation (over 55 percent of borrowers), followed by financing everyday bills and home improvements.
Mortgages: As of 2024, the average mortgage balance per person in the U.S. is approximately $244,498. Mortgage balances can vary significantly based on factors such as location, property value, and the borrower’s credit profile.
The average monthly mortgage payment in the U.S. is around $1,900 to $2,300, depending on interest rates, loan terms, and the size of the down payment. The payments are influenced by recent increases in mortgage rates, which have hovered around 7 percent for a 30-year fixed-rate mortgage. Areas with higher property values typically have higher average payments.
If you’re looking to buy a home or refinance, it’s important to consider not just the loan amount, but also how changing interest rates, property taxes and HOA fees will affect your monthly payment.
Now that you’ve read the average debt balance in each category, the question remains, “Is your debt load above average?”
Compare your debt exposure to each category.
For those debts that are below the averages, kudos to you!! Now make it a priority to pay them off as fast as you can.
For those debts that are above the national averages, it’s reasonable to argue that it’s higher because it’s relative to a person’s income.
Truth of the matter is, the more you earn, the less you should need to borrow. So, if you’re a high earner and your debt load is above average, you need to take a hard look at your numbers and adjust as needed.
(Damon Carr, Money Coach can be reached @ 412-216-1013 or visit his website @ www.damonmoneycoach.com)
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