80% of Americans Are in Debt

The vast majority of Americans are in debt, according to a report from Pew Charitable Trusts published in July. For the most part, that debt comes from what many people would call a good thing — homeownership. Of the 80% of Americans with debt, 44% have mortgage debt. Overall, the median debt load among Americans is $67,900, overwhelmingly driven by mortgages (the median home loan balance is $103,000).

Still, Americans have a lot of non-mortgage debt, too, particularly young Americans. Only 33% of millennials (people born between 1981 and 1997), have home loans. In fact, millennials are much more likely to have student loan debt (41% have it), car loans (41%) or credit card debt (39%) than they are to have a mortgage. Among all other generations, mortgages are the leading component of consumer debt.

Credit card debt is still incredibly common among American consumers — with 39% of Americans reporting unpaid credit card balances, it’s not far behind mortgages as a leading contributor to consumer debt. While those balances are much lower than those for student loans, the high interest rates and revolving nature of credit card debt can make it a serious threat to consumers’ financial health.

Having debt isn’t inherently a problem, but it can quickly become one if you’re living beyond your means or not working toward bringing your balances to zero. Carrying a lot of debt — relative to your limits for revolving credit accounts — can have an adverse affect on your credit scores, which can subject you to higher interest rates on debt in the future. Here’s a calculator that can show you how your credit scores can affect your lifetime cost of debt. Keeping balances low relative to your credit limits — no more than 30%, but ideally less than 10% — can be beneficial to your scores. As you pay off credit card debt (assuming you don’t add to it at the same time), you should see your scores start to improve. You can see how long it will take you to pay off your credit card debt and how much you can save by adjusting your payments using this credit card debt payoff calculator.

If you’re among the 80% of Americans with debt, the best thing you can do is focus on managing your debt and credit well. Taking out loans or using credit cards can be a great financial strategy, but it’s important to go after the balances with a plan. Regularly review your credit score (you can get your credit score for free on Credit.com) so you understand how your debt affects your credit standing, and set realistic goals for paying your debt down, while saving up for your future.