As shocking as it may sound, the average American spends a lifetime in debt. Take a look at the full graphic now, or continue to read!
Credit and Debt for Young People
Then first debt that many teenagers get into is credit card debt, particularly with store credit cards. Although the Credit Card Accountability and Responsibility Disclosure (CARD) Act of 2009 restricts lenders from issuing credit cards to people under 18, many young people manage to acquire credit cards anyway, often at the encouragement of their parent or parents. And the popular choice? Department store cards. However, these cards can carry higher interest rates than most, especially for young people with little to no credit history.
The First Credit Card
The average person spends more and more on debt every year. This begins with the first department store card and continues with the first credit card. Many people consider their first credit card to be a step toward adulthood and responsibility. In fact, more than 70 percent of college students have credit cards, and less than 2 percent of undergraduates have no credit history. Yet studies indicate that students know little about their obligations and how these cards work. This can be seen in the debt levels they carry. The average undergrad has $3,200 in credit card debt, indicating that they have yet to understand what they have gotten into. Of course, student debt doesn’t end there.
Student Loan Debt
In addition to credit card debt, many students have student loan debt for their undergraduate degree, with an estimated 12 million students included. According to recent figures, the average debt is almost $27,000 for a four year degree. This number is even higher for graduate students, with master’s degree students taking on an additional $17,000 in student loans and doctoral students $29,000. However, medical school graduates leave school with an average of $113,000 in debt, in addition to the 4 or more credit cards and average $8,600 owed on them. And yet many of these students have little idea how their credit will impact their future.
Debt Keeps Growing and Growing
And that’s just the beginning! Auto loans average $30,738 worth of debt and continue to increase as the loan length increases. The average mortgage is now $230,000 and continues to increase, despite low interest rates. Then come the add-ons, like a second car loan, more credit cards and mortgage refinance or home equity loan. Sometimes these loans are taken just to buy the latest gifts or to have more and more stuff in the house. At other times, additional loans are taken to pay off earlier loans! Home equity might be used later in life to get rid of lingering student loan debt. Homes might be refinanced to purchase an additional car or truck! The cycle just goes on and on.
Last but not least are funeral expenses. The average funeral is well over $10,000 and while other options are less expensive, many families take on the debt anyway. Maybe it’s time to put those credit cards away after all?