Consumer debt is debt that develops due to everyday expenditures. Unlike debt incurred for education or homeownership (such as mortgages) consumer debt is considered detrimental; it usually takes the form of a credit card balance or payday loan, and both forms of debt carry high interest rates.

While many American households carry no consumer debt, those that do tend to carry many thousands of dollars' worth.

Long-term consumer debt is usually considered, in general, fiscally suboptimal. While some consumer items (automobiles, which are usually exempted in discussions of "consumer debt", and business suits) may be useful investments that justify debt, most consumer goods are not. For example, the expenditure in getting a big-screen television now (and thus incur high-interest consumer debt) rather than saving for it is usually not justified (in strict financial terms) by the subjective benefits of having the television early.

Critics of consumer debt decry the practice as an example of an emphasis on instant gratification over long-term fiscal prudence.

External links

• FRB: Z.1 Release--B.100--Balance Sheet of Households and Nonprofit Organizations
  • FRB: Z.1 Release--L.10--Assets and Liabilities of the Personal Sector
• Help with personal debt