How does your current debt load compare to the average American?

Credit cards

The average amount of credit card debt per consumer in the U.S. in 2023 was $6,501, according to Experian. That might not seem terribly high, but also consider that, as of May, the average commercial bank credit card interest rate was 21.51%, per the Federal Reserve Bank of St. Louis.

If you want to pay off that balance in three years, at that interest rate, it would require monthly payments of $247, and you'd be losing about $2,378 to interest charges.

Credit card debt is typically categorized as “bad debt” because, generally speaking, it does not improve your financial situation. If you’re juggling credit card debt, you may want to consider consolidating it into a personal or home equity loan. Doing so could lower your monthly payments by virtue of a lower interest rate.

Plus, you’ll have the benefit of a fixed interest rate on your debt, which leads to predictable monthly payments. Due to the variable nature of credit card interest, card balances can be much harder to keep up with and get ahead of.

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Student loans

The average cost of college per year in the U.S. is $38,270, according to the Education Data Initiative. This includes tuition, books and daily living expenses. It’s not so surprising, then, to learn that the average student loan balance in 2023 was $38,787, per Experian.

Most people consider student loans to be a good type of debt, since a degree can lead to a high-paying job. But depending on the type of student debt you have, you may be looking at a higher interest rate. And carrying too much student loan debt might upend your finances in less obvious ways. A survey commissioned by CNBC in 2022 found that 81% of student loan borrowers had to delay key life milestones, such as saving for retirement or buying a home, because of their debt.

If you have federal student loans, it pays to see if you qualify for any forgiveness programs, which may be the case based on your profession and the number of payments you’ve made to date. If you have private loans, see if it’s possible to refinance them to a lower interest rate.

Auto loans

The average U.S. consumer’s auto loan balance in 2023 was $23,792, Experian data shows. That's a lot of money to owe on an asset that naturally loses value over time. According to Kelley Blue Book most vehicles lose about 20% of their value in the first year and are often worth only about 40% of their original purchase price after five years.

To some degree, it’s possible to categorize an auto loan as good debt, since a car allows you to drive to a job and earn money. But it’s best to keep car loan payments as low as possible.

If you’re struggling with a large auto loan balance, you can always look into refinancing to a lower rate. This especially makes sense if your credit score is higher now than it was when you first signed your loan.

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Mortgages

The average U.S. mortgage balance in 2023 was $244,498, per Experian. Considering the average U.S. home value is $361,282, according to Zillow, that doesn’t read like such a large number.

Mortgages are typically considered good debt because homes can gain value over time and provide us with necessary shelter. Furthermore, while you’ll often hear that it’s wise try to pay debt off early, mortgages can be an exception,

If you locked in a low interest rate on your home loan – which may be the case if you refinanced in 2020 or 2021, when mortgage rates plunged to record lows – then you may want to consider sticking to your regular payment schedule and using any extra money to pay off costlier debts. Or, you can invest that money and potentially earn more in stock market returns than what you’ll save on mortgage interest.

If you’re sitting on a higher mortgage rate, you might still want to hang on to that loan and pay it off over time. But in that case, refinancing once interest rates fall could make sense.

Remember, too, that mortgage interest on a loan of up to $750,000 can serve as a tax deduction. So to some degree, continuing to carry that debt could save you money.