Being able to tap into a credit facility is the norm for most individuals and businesses in modern America. But do you clients know the mammoth task it would be to clear their debts?
The prevalence of credit cards means that debts can appear less problematic – everyone’s in the same boat right? But a new report shows how this normalization of debt may mask the situation the average American is in.
Debt.com says that many people just don’t think of their debts as a problem, even though the average owed is $105,056 (2024 Experian stats) a rise of 0.8% year-over-year.
Next week is Debt Awareness Week, founded by Debt counsellor and chairman of Debt.com, Howard Dvorkin.
"The latest data paints a sobering picture, but still a third of Americans are maxing out their credit cards, we feel there's safety in numbers," he said. "When everyone is in debt, no one feels like it's a problem. Debt becomes a way of life."
Given that median weekly full-time earnings are $1,192, a total of around $62K a year (US Bureau of Labor Statistics) it would take 20 months to clear the debt using every dollar of income with nothing spent on living expenses!
"Once you realize that you're working most of the year just to pay down debt, it really starts to sink in," said the firm’s president Don Silvestri. "A lump sum like $20,000 in debt may not seem overwhelming, but when you break it down into days of your life, it hits differently."
The average unpaid credit card debt was $7,236 in Q3, 2024 with total average credit card debt reaching $8,674.
"When looking at credit card debt alone, the average person would need nearly two full months of pay to clear their balances," added Silvestri.
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