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American Debt Tops $4 Trillion for the First Time

, by Rob Kaufman

Last year's holiday spending added a lot of debt to people's credit cards. (Good to know, now that we're in the holiday season.) Add to that student loans and auto financing and the debt keeps growing.

$4 trillion is a lot of money. However, some economists say it's pretty "manageable" overall. They also say consumers must make sure they're not taking on more debt than they can handle.

You might see yourself in these facts or some of them may amaze you. Either way, you can use them as information to help keep yourself (and those you love) out of debt.

Below are some facts about the $4 trillion that might interest you.

  • The average credit card balance is...

$4,293. Yes, according to Experian, the average American has a credit card balance of almost $4,300. This helps explain why credit card debt is also at its highest point ever - over $1 trillion.

According to a survey by WalletHub, 1 in 3 Americans (about 86 million people) are in fear of maxing out their credit cards when making a large purchase (over $100). Add to that, average credit card interest rates are at an all-time high: 17.41%. Even so, credit card late payments over 90 days past due remain low.

What does this all mean? Well, although credit card balances are extremely high, most consumers appear to be paying their balances on time. If you're one of those consumers, congratulations. If you're not, it might be time to consider a new budget or debt consolidation.

  • Outstanding student loan debt has reached...

$1.5 trillion. A college education is now the second-largest expense a person will make in their lifetime. A home purchase is number one. At this time, 44 million Americans have outstanding student debt. That's why it's become one of the biggest categories of consumer debt.

Many people with this type of debt search for ways to lower their interest rates. This can help keep more money in your pocket (or savings) and possibly aid in making you debt-free faster. Here are the top 3 ways to help lower your rate:

  1. Refinance your student loan for a new, private loan with a lower interest rate. You'll need good-to-excellent credit and a comfortable income.

  2. Automate your payments because many federal loans and private lenders offer a .25% interest rate discount if you enroll to have your payments automatically deducted from your bank account.

  3. Enjoy a loyalty discount if you currently have a relationship with a bank or lender. This relationship is typically for borrowers who already have a checking account or existing student loan with the lender. Loyalty discounts might be small, but they can add up.

  • In March of 2019, the amount Americans owed in auto loans was...

$1.16 trillion. That's right, Americans originated 27 million new auto loans in 2018. Believe it or not, that's 540,000 less than in 2016, but debt reached new levels because car prices have increased. And the worst part? 4.7% of outstanding auto debt is delinquent by 90 days or more. 

If you're having trouble paying your car loan, take a look at these tips. Some might work, some might not - depending on your individual circumstances.

  1. Refinance and/or renegotiate

  2. Pay it off

  3. Trade-in your old car as a down payment on a new one, but cheaper car

  4. Surrender your car to the lender

You must carefully research all these options before making a decision. Again, it's all about what works best for you and your situation.

It's easy to see how these three categories alone: credit card, student debt and auto loans can add up to $4 trillion. Just try to make sure to keep your debt under control so you don't have to take any of the steps outlined above.

If you'd like to discover your FICO Score range for FREE, it's waiting for you right here.

Rob Kaufman

Rob is a writer... of blogs, books and business. His financial investment experience combined with a long background in marketing credit protection services provides a source of information that helps fill the gaps on one's journey toward financial well-being. His goal is simple: The more people he can help, the better.