Really, really bad.
As a whole, Americans owe $712 billion in credit card debt alone. The average American has about $130,000 total debt. About 11% of that is from credit cards: $15,000. 11% may not sound like a lot, but $15,000 is nothing to sneeze at.
And it’s getting worse. Since 2002, the median household income has increased by 26%. That’s good – but not good enough, because household expenses have gone up much faster.
Price growth since 2002:
- Household income: 26%
- Medical expenses: 51%
- Groceries: 37%
- Electric: 42%
- College: 67%
- Health Care: 97%
In fact, there are only three categories in which the cost hasn’t grown faster than income growth: clothing, recreation, and transportation. This might be because, after the economic crisis from a few years ago, people started budgeting their money differently, and demand for those three categories decreased. It’s really only the things we have to buy that we’re being overcharged for. The people in charge of the prices know they can get away with charging us more, because we’ll buy them anyway.
As a whole, the cost of being an American has gone up by 29% since 2002. That might not look like a big difference, compared to the 26% wage increase, but remember; a single percentage point represents thousands of dollars. Those who have poor health, live in expensive cities, or take out student loans are feeling the difference much more.
These added costs are forcing people to use their credit cards for the things they need. Then, when their credit card bill comes and they still can’t afford it, their debt is increasing, adding interest to their woes. Month to month, even if they can afford to pay the bill, interest costs keep rising out of control. This vicious cycle is happening more and more often.
The average household pays almost $7,000 a year in interest alone. That’s 9% of the average household income of $75,600. You’re already losing enough of your paycheck from taxes, and in paying back the debt in the first place. Don’t you think it’s time to do something about it, before you lose more to these obscene interest rates?
To see ways in which you can reduce your credit card debt and pay it off faster and easier, check out our next article, here.