Many economists advocate the power of personal debt to fuel economic expansion. With the availability of cheap credit and increased demand for consumer goods, consumers can help to increase domestic production and economic growth. However, as the household debt ratio to GDP in the United States shows, talking in macroeconomic terms creates distance to the personal tragedies that result from excessive debt, often having their beginnings in high debt payment to income ratio.
There are various sources of debt in the United States, but mortgages and credit card debt accounted for over 40 percent of all consumer debt in 2020. Credit card debt is one of the worst types of debt due to the high interest rates, which makes it harder to pay off. In some states, the average value of credit card debt was as high as 8.5 thousand U.S. dollars in 2019.