Consumer debt is any debt used to purchase goods that are consumable and do not appreciate in value.
Why It's Important
This type of debt includes credit cards, payday loans, and the like. They generally have higher interest rates than secured debt (i.e. home loan or car loan) because it poses more risk to the creditor. If you default on consumer debt, the creditor is unable to take away anything that you bought with it.
Also, it is important to note that consumer debt is not incurred by businesses or the government only individuals. So how much consumer debt are we in as Americans? Brace yourself! In June 2019, U.S. consumer debt was a whopping $4.1 trillion! That's crazy! Remember, that doesn't include houses or cars. We are in trouble!