Personal Finance Essentials
Credit and Debt
Understanding
Credit and Debt
Most important purchases cannot be paid for in cash, simply because of the cost. The average wedding costs $33,000; new automobiles $50,000; college $100,000 to $400,000; the average home $430,000.
Credit lets you borrow money to buy now, and you repay the debt via monthly payments, usually over a set period.
The amount you can borrow depends in part on your credit score, which is set by credit reporting agencies. Your score is determined by your income, record of borrowing and repayments, current indebtedness and other factors.
The State of Consumer Debt
Americans have $1.8 trillion in student debt, an average $41,530 per student borrower, plus
$1.7 trillion in auto loans, $12 trillion in credit card debt and $12.6 trillion in mortgage debt.
The average American has four credit cards, with a total balance owed of $3,848. Many Americans find themselves in debt due to:
Quick Quiz
