Revolving debt, which is comprised mostly of high-interest credit card loans, stood at $874 billion in November, on a seasonally adjusted basis. That’s down 9.3% over the past year, and 18.5% from the previous month, on an annualized basis. Seeing as though the population of the US is about 300 million, that would come to over three credit cards for every man, woman, and child in the country. But if we figure that about 50% of the population is over 20 years old (very rough estimate), we’re left with only 150 million people – meaning that each and every adult in the US would have about 7 cards each.
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Unfortunately, medical bills, divorce, mortgage or credit card rate increases, and other expenses can cause debt to grow until it is out of control. The stress caused by debt can often be overwhelming affecting your family, friends and relationships. Nonrevolving credit, such as auto loans or student loans, rose by $3.44 billion, or 2.6%, to $1.595 trillion. If Americans were to stop credit-card spending completely, it would take decades to wipe out the $700 billion in credit-card debt currently owed. Assuming an annual percentage rate of 20% and a minimum payment of 2%, it would take 601 monthly payments — or 50 years — for America to pay off that much debt, racking up more than $3 trillion in interest in the process.
This trouble in the consumer credit market clearly reflects the heavy revolving debt burden that households are shouldering. The debt service burden, that is, how much consumers have to pay out of their disposable income to service their loans, has reached record levels.