Total credit card debt in the UK was £56.5 billion in August 2021. This is far less than the £72.1 billion reported in 2020. Average credit card debt per household was £2,033 as of August 2021. That figure represents an average of £1,068 per adult.
The average adult owes £33.410 in total debt.
In March 2021, the Office for Budget Responsibility predicted that the total UK household debt would climb from £2,006 billion in 2020 to £2.354 billion in 2025, resulting in an average total debt of £82,641 per household in the United Kingdom.
If you have credit card debt, you're not alone. On average, Americans carry $6,194 in credit card debt, according to the 2019 Experian Consumer Credit Review.
The average debt for individual consumers dropped from $6,194 in 2019 to $5,315 in 2020. In fact, the average balance declined in every state.
How much money does the average American owe? According to a 2020 Experian study, the average American carries $92,727 in consumer debt. Consumer debt includes a variety of personal credit accounts, such as credit cards, auto loans, mortgages, personal loans, and student loans.
This means scheduling and paying off your debts from smallest to largest. If you have debts that are between 43% and 50% of your annual income, then this is considered as too much. In these instances, it's recommended that you consult a credit counselling agency such as StepChange, National Debtline or Citizens Advice.
The average credit balance across all accounts, excluding mortgages, is now £7,851 – when it was £11,615 at the start of March 2020 and £9,681 in June 2020.
Bad debt refers to loans or outstanding balances owed that are no longer deemed recoverable and must be written off. This expense is a cost of doing business with customers on credit, as there is always some default risk inherent with extending credit.
Being debt free to start with means having minimal to no bad debts and average good debts. Being debt free doesn't mean you have no mortgage, bills, or car payment. It means you carry a manageable amount of debt, and are cognizant of your borrowing and DTI.
When you have no debt, your credit score and other indicators of financial health, such as debt-to-income ratio (DTI), tend to be very good. This can lead to a higher credit score and be useful in other ways.
The auto loan itself would be considered the "debt." The payments toward it would be considered "debt payments." With regard to your credit report, if you are applying for another loan somewhere and they looked at your debt-to-income ratio, the monthly auto loan payments would be included on the debt side.
If your total balance is more than 30% of the total credit limit, you may be in too much debt. Some experts consider it best to keep credit utilization between 1% and 10%, while anything between 11% and 30% is typically considered good.
And yet, over half of Americans surveyed (53%) say that debt reduction is a top priority—while nearly a quarter (23%) say they have no debt. And that percentage may rise.
About 52% of Americans owe $2,500 or less on their credit cards. If you're looking at $5,000 or higher, you should really get motivated to knock out that debt quickly.
Kevin O'Leary, an investor on “Shark Tank” and personal finance author, said in 2018 that the ideal age to be debt-free is 45. It's at this age, said O'Leary, that you enter the last half of your career and should therefore ramp up your retirement savings in order to ensure a comfortable life in your elderly years.
Is being debt-free the new rich? Yes, as long as you have money and assets, in addition to no debts. Living loan-free is a fantastic way to stay financially secure, and it is possible for anyone. While there are a couple of downsides to being debt-free, they are minimal.
Here's the average debt balances by age group: Gen Z (ages 18 to 23): $9,593. Millennials (ages 24 to 39): $78,396. Gen X (ages 40 to 55): $135,841.
Credit Card Debt Trends
In Q4 2021, the average credit cardholder in the U.S. had $5,934 in credit card debt in Q4 2021 — about 0.6% less than Q4 2020's $5,968 average. During this same period, Americans opened 26 million more credit card accounts.
If you want to improve and maintain a good credit score, it's more reasonable to keep your balance at or below 30% of your credit limit. For example, that means your credit card balance should always be below $300 on a credit card with a $1,000 limit.
Average American Credit Card Debt in 2022: $5,221. Many or all of the products here are from our partners that pay us a commission.
Character, Capacity and Capital.
Mortgages are seen as “good debt” by creditors. Since the mortgage debt is secured by the value of your house, lenders see your ability to maintain mortgage payments as a sign of responsible credit use. They also see home ownership, even partial ownership, as a sign of financial stability.
According to experts, a car payment is too high if the car payment is more than 30% of your total income. Remember, the car payment isn't your only car expense! Make sure to consider fuel and maintenance expenses. Make sure your car payment does not exceed 15%-20% of your total income.
Our recommendation is to prioritize paying down significant debt while making small contributions to your savings. Once you've paid off your debt, you can then more aggressively build your savings by contributing the full amount you were previously paying each month toward debt.
It might appear impossible, but many consumers succeed in living their entire lives without any debt. People of a variety of ages and income levels have made this choice. It's not an easy feat, but if it's something you truly want, don't let naysayers talk you out of it.