5 Most Common Kinds of Debt in the U.S.

According to a March 2022 report published by the Urban Institute, 28% of Americans with credit records had debt in collections. Debt isn't always a bad thing—"good debt" is money owed for items or investments that can help build wealth, such as mortgages. But money owed on purchases that provide little financial gains, such as electronics or vacations, can quickly accrue as "bad debt" that can weigh down a person's personal finances.

A home equity line of credit (HELOC) is a form of a second mortgage that allows homeowners to borrow funds against their home's value. Calculating the difference between the home's value and how much is owed on a mortgage determines the home's equity. 

#5. Home Equity Revolving Debt

The first modern credit card used in the U.S. was issued by the Diner's Club, Inc. in 1950. It was the first card that could be used in lieu of cash or a bank check to purchase goods and services from multiple vendors. In 1958, American Express introduced a credit card that carried a balance.

#4. Credit Card Debt

Inflation has driven up car prices dramatically, particularly used car prices. The supply shortages that started in 2020 for semiconductors and microchips contributed to plummeting inventory amid a surge in demand for new cars; many shoppers flocked to the used car market to purchase vehicles instead.

#3. Auto Loan Debt

Harvard University became the first institution to offer student loans in 1840. In 1965, federal student loans were created, which defined a pivotal moment for higher education. Today, 43 million Americans carry student loan debt according to the Educational Data Initiative.

#2. Student Loan Debt

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