America’s Growing Debt Crisis: Mortgage and Credit Card Interests Now Nearly Equal

Interest Payments for Americans, Excluding Mortgages, are Increasing Rapidly

Americans are currently spending nearly as much on interest payments for credit cards and other consumer debt as they are on mortgage interest, according to new data from the US Bureau of Economic Analysis. This marks a shift from previous decades, as historically, mortgage interest payments have always been significantly higher than non-mortgage interest payments. The trend towards nearly equal debt service costs has emerged as interest rates have risen, making other types of debt more costly. While homeowners have been able to lock in low mortgage rates, interest rates on credit cards and other forms of consumer credit have increased.

This shift is particularly notable given the record low mortgage rates available to Americans in recent years, following the 2008 financial crisis and throughout the pandemic. Fitch Ratings reports that the effective rate on US mortgage debt was 3.7% in the third quarter of last year, while credit card interest rates were significantly higher at 21.19%. This discrepancy in interest rates has raised concerns about Americans being able to manage their debt payments, especially as student loan repayment resumed for millions of borrowers in the fourth quarter of last year.

Despite the rising costs of other forms of debt, mortgage debt remains the largest financial obligation for most Americans. The average American debt load reached $104,215 in the fourth quarter of 2023, with mortgage debt accounting for the majority at $12.25 trillion. In comparison, credit card debt stood at $1.13 trillion at the end of last year. As interest rates continue to fluctuate, it will be crucial for Americans to carefully manage their debt to avoid financial strain.

The rising costs of consumer and credit card debt have become a growing concern among experts in recent years. While historically, mortgage

Leave a Reply