Consumer Debt Statistics: Causes and Impact

3 Reasons Why Americans Are in So Much Debt

Cut credit card
Many consumers cut credit cards during the recession -- and left them that way. Photo: Chemistry/Getty Images

Definition: Consumer debt is what you owe, as opposed to what a business or the government owes. It's also called consumer credit. It can be borrowed from a bank, a credit union and even the federal government. 

There are two types of consumer debt: credit cards (aka revolving) and fixed-payment loans (aka non-revolving).  Credit card debt is called revolving because it's meant to be paid off each month.

Non-revolving debt isn't paid off each month.  Instead, these loans are usually held for the life of the underlying asset. Although home mortgages are also an enormous debt, they aren't consumer debt. Instead, they are considered to be personal investments in residential real estate.

In March 2017, U.S. consumer debt rose 5.2 percent to $3.8 trillion. That was the highest since the recession. But it's made up mostly of loans, while it was made up of credit card debt back then.

Of this, $2.8 trillion was non-revolving debt, and it rose 6.2 percent. Credit card debt totaled $999.8 billion, and it increased 2.4 percent during the month. (Source: "G-19 Report," The Board of Governors of the Federal Reserve System.)  

Why are Americans in so much debt? There are three main reasons: credit cards, auto loans and school loans. 

1. Credit Card Debt

Credit card debt rose due to the Bankruptcy Protection Act of 2005.

That Act made it harder for people to file for bankruptcy. As a result, they ran up credit cards in a desperate attempt to pay their bills. Most of this was to pay for health care. Credit card debt reached its all-time peak of $1.028 trillion in July 2008. That's an average of $8,640 per household.

 See Health Care Costs Are the No.1 Cause of Bankruptcy.

The recession curtailed credit card debt. It fell more than 10 percent in each of the first three months of 2009. During the recession, banks cut back on consumer lending. Then the Dodd-Frank Wall Street Reform Act increased regulations over credit cards, so they tightened credit standards. By April 2011, it had fallen to a low of $839.6 billion.  Despite these decreases, the average American household still owed $7,055 in credit card debt.  For more, see Consumer Financial Protection Agency.

2. Auto Loans

Car loans are normally three to five years. These loans can be paid back with either fixed interest rates or variable rates. If the borrower fails to make payments, the bank will usually reclaim the underlying asset. They've risen so much because people are taking advantage of low-interest rates, thanks to the Fed's expansive monetary policy

3. School Loans

School loans are typically ten years but can be extended to 25 years. Of course, the bank can't claim any asset on school loans. For that reason, most school loans are guaranteed by the Federal government. These loans have low interest rates to encourage higher education. The government invests in this kind of spending because the country benefits from a more highly skilled workforce.

That could eventually lead to a reduction in the nation's income inequality and a healthier economy

These loans skyrocketed during the recession. Many unemployed people sought to improve their skills. In 2010, the Affordable Care Act allowed the Federal government to take over the student loan program from Sallie Mae, which had previously administered it. The savings meant loans were more affordable, further boosting education loans.

How Consumer Debt Benefits the Economy

The Federal Reserve reports on consumer debt each month. It's important because consumer debt drives the American dream and contributes to economic growth. It allows you to furnish your home, pay for education, and get a car without having to save for them.

As long as the economy grows, you can pay off this debt more quickly in the future.

That's because your education allows you a better-paying job, and the cars and furniture you buy create jobs. That creates an upward cycle, boosting the economy even more. 

Average Consumer Debt Statistics Since 2006 (in trillions of dollars)

MonthCredit CardLoansTotal% Change
2006 Jan$.876$1.495$2.3712.3%
Mar$.884$1.504$2.4000.5%
Apr$.890$1.511$2.4110.4%
May$.897$1.515$2.4110.2%
Jun$.896$1.504$2.400-0.7%
Jul$.899$1.511$2.4100.5%
Aug$.905$1.521$2.4260.7%
Sep$.908$1.529$2.4260.5%
Oct$.911$1.525$2.436-0.3%
Nov$.917$1.531$2.4480.4%
Dec$.925$1.538$2.4630.4%
2007CardLoansTotalChange 
Jan$.927$1.541$2.4680.2%
Feb$.932$1.548$2.4800.4%
Mar$.98$1.555$2.4930.4%
Apr$.941$1.560$2.5010.3%
May$.951$1.567$2.5180.5%
Jun$.954$1.574$2.5280.4%
Jul$.961$1.584$2.5450.6%
Aug$.971$1.594$2.5650.7%
Sep$.978$1.602$2.5800.5%
Oct$.986$1.607$2.5920.3%
Nov$.996$1.607$2.6080.3%
Dec$1.003$1.614$2.6170.1%
2008CardLoansTotalChange
Jan$1.009$1.623$2.6320.6%
Feb$1.016$1.631$2.6470.5%
Mar$1.019$1.637$2.6560.3%
Apr$1.022$1.642$2.6640.3%
May$1.021$1.646$2.6670.2%
Jun$1.022$1.650$2.6720.3%
Jul$1.022$1.653$2.6760.2%
Aug$1.020$1.651$2.672-0.1%
Sep$1.015$1.652$2.6670.0%
Oct$1.020$1.649$2.668-0.2%
Nov$1.012$1.649$2.6600.0%
Dec$1.005$1.646$2.651-0.2%
2009CardLoansTotalChange
Jan$1.008$1.652$2.6600.3%
Feb$.999$1.651$2.6500.0%
Mar$.987$1.644$2.631-0.4%
Apr$.982$1.640$2.622-0.3%
May$.970$1.646$2.6150.4%
Jun$.966$1.633$2.599-.08%
Jul$.963$1.632$2.5950.0%
Aug$.953$1.631$2.584-0.2%
Sep$.949$1.628$2.577-0.2%
Oct$.942$1.632$2.5740.2%
Nov$.926$1.631$2.557-0.2%
Dec$.917$1.636$2.5540.3%
2010CardLoansTotalChange
Jan$.911$1.632$2.5430.2%
Feb$.904$1.630$2.534-0.1%
Mar$.901$1.637$2.5380.4%
Apr$.896$1.635$2.531-0.1%
May$.887$1.636$2.5230.1%
Jun$.880$1.642$2.5230.4%
Jul$.874$1.643$2.5170.1%
Aug$.868$1.650$2.5180.4%
Sep$.862$1.659$2.5210.5%
Oct$.856$1.674$2.5300.9%
Nov$.851$1.680$2.5310.3%
Dec$.841$1.807$2.6487.6%
2011CardLoansTotalChange
Jan$.838$1.820$2.6580.7%
Feb$.836$1.834$2.6700.7%
Mar$.838$1.838$2.6750.2%
Apr$.834$1.846$2.6800.5%
May$.837$1.851$2.6890.3%
Jun$.839$1.860$2.6990.5%
Jul$.838$1.883$2.7211.2%
Aug$.838$1.875$2.713-0.4%
Sep$.839$1.884$2.7230.5%
Oct$.840$1.886$2.7260.1%
Nov$.843$1.901$2.7430.8%
Dec$.843$1.915$2.7570.7%
2012CardLoansTotalChange
Jan$.842$1.930$2.7710.8%
Feb$.843$1.941$2.7830.6%
Mar$.842$1.952$2.7940.6%
Apr$.840$1.966$2.8060.7%
May$.847$1.979$2.8260.7%
Jun$.844$1.999$2.8441.0%
Jul$.842$2.007$2.8490.4%
Aug$.847$2.021$2.8680.7%
Sep$.845$2.033$2.8780.5%
Oct$.848$2.047$2.8950.7%
Nov$.848$2.062$2.9100.8%
Dec$.846$2.079$2.9240.8%
2013CardLoansTotalChange
Jan$.849$2.092$2.9410.6%
Feb$.850$2.113$2.9641.0%
Mar$.848$2.120$2.9700.3%
Apr$.849$2.130$2.9800.5%
May$.853$2.143$2.9980.6%
Jun$.851$2.161$3.0120.8%
Jul$.852$2.169$3.0220.6%
Aug$.854$2.184$3.0380.7%
Sep$.855$2.201$3.0550.8%
Oct$.857$2.216$3.0730.6%
Nov$.856$2.227$3.0840.5%
Dec$.858$2.241$3.0990.6%
2014CardLoansTotalChange
Jan $.860  $2.254 $3.114  0.6%
Feb $.860 $2.270 $3.129  5.9%
Mar $.861 $2.286 $3.147   7.5%
Apr $.871 $2.303  $3.174  10.0%
May $.873 $2.320  $3.193    7.3%
Jun $.876 $2.336  $3.212    7.1%
Jul $.881 $2.353  $3.233   8.5%
Aug $.881 $2.368  $3.249   5.2%
Sep $.883 $2.384 $3.268  5.7%
Oct $.885 $2.400 $3.284  5.8%
Nov $.886 $2.415 $3.301  6.5%
Dec $.890 $2.428 $3.318  4.2%
2015CardLoansTotalChange
Jan $.887 $2.441 $3.328  3.6%
Feb $.886 $2.457 $3.343  5.5%
Mar $.891 $2.473 $3.364  7.6%
Apr $.899 $2.473 $3.366  7.6%
May $.903 $2.500 $3.401  5.9%
Jun $.910 $2.525 $3.435  9.6%
Jul $.915 $2.539 $3.454  6.8%
Aug $.919 $2.552  $3.470  5.6%
Sep $.923 $2.573 $3.496  9.9%
Oct $.923 $2.588 $3.512  5.8%
Nov $.931 $2.596 $3.525  4.8%
Dec $.936 $2.597 $3.533  7.3%
2016CardLoansTotalChange
Jan $.938 $2.611 $3.549 4.4%
Feb $.939 $2.620 $3.560 4.4%
Mar $.950 $2.642 $3.592 9.9%
Apr $.951 $2.654 $3.605 4.5%
May $.957 $2.672 $3.628 7.5%
Jun $.966 $2.677 $3.643 4.8%
Jul $.969 $2.692 $3.661 5.9%
Aug $.975 $2.713 $3.687 8.8%
Sep $.979 $2.728 $3.707 6.3%
Oct $.981 $2.746 $3.727 5.2%
Nov $.995 $2.755 $3.750 7.9%
Dec $.999 $2.766 $3.765 4.7%
2017    
Jan $.996 $2.779 $3.775 3.1%
Feb $.998 $2.791 $3.789 4.4%