In shocking new studies, ever since the post-recession figure of 12.7 trillion, it has been found that Americans are now sitting on 14 trillion dollars worth of debt. Coming from credit cards, mortgages, and other financial loans, this staggering number shows the horrific side effects of the new wave of cheap and easy borrowing terms.
Consumer debt or the debt from borrowing against material objects, such as cars, televisions, and household goods, stands 1.3 trillion dollars higher than the previous record set in 2008. The result of this easy borrowing? A huge rise in Americans in serious debt. So much so that many Americans have to turn to a lawyer to see if there is anything they can do.
The interest on credit cards hit a twenty-five year high at 17%. This makes credit cards a very expensive form of borrowing. This could be due to the use of “flash rewards” to lure people in. These rewards usually come at the cost of higher rates. This is because the credit card companies know that users often don’t pay attention to the rates they are getting.
Just last quarter, we saw an increase in household debt of nearly 1%, I know that doesn’t sound like much, but 1% of 14 trillion is 140 billion dollars.
As well as consumer debt, student loans have risen to 1.5 trillion dollars. This is a sore point as over 10% of that debt is over 90 days delinquent or defaulted. That’s the highest rate of missed payments and late payments out of any of the loan types.
Some studies are even suggesting that race might be a factor in this.
The rates of people defaulting in areas with a higher percentage of black students are nearly double those in white-majority areas. The research says that these repayment problems show the stark reality of the importance of income equality across the areas.
So will America’s debt doom us all?
The short answer to this is no. With doomsayers all around America warning us that America’s massive debts will end civilization, it is easy to see why the average American may be slightly worried.
When you think of the entire countries debt, which sits at a scary 23 trillion dollars worth, it seems pretty damning, right? However, most of these people talking about financial collapse forget some important things. The main one being that too measure up the real risk, you have to measure the value of a countries hard assets in comparison to their debts.
The U.S.U.S. alone holds nearly 176 trillion dollars in hard assets. That is almost ten times the public debt. On top of this, a significant accounting factor is that it will never actually be about paying off debt; all that matters is that we can afford the interest payments. And in that regard, currently, the annual interest payments for the U.S.U.S. only require about 10% of the money collected by taxpayers a year.
During the 1980s that number sat at around 20%, if it didn’t doom us then, I don’t think it will now!