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Consumer debt

{{Short description|Amount owed by individual consumers}}

{{for|information about loans to consumers|Consumer lending}}

{{more citations needed|date=October 2009}}

{{Macroeconomics sidebar}}

File:Consumer and Government Debt as a % of GDP.png

[[File:Personal savings rate & revolving credit.webp|thumb|275px|Personal savings & consumer credit in the US

{{legend-line|#4572A7 solid 3px|Personal savings rate (left)}}

{{legend-line|#AA4643 solid 3px|Revolving credit (right)}}

]]

File:Consumer Leverage Ratio.webp]]

In economics, consumer debt is the amount owed by consumers (as opposed to amounts owed by businesses or governments). It includes debts incurred on purchase of goods that are consumable and/or do not appreciate. In macroeconomic terms, it is debt which is used to fund consumption rather than investment.{{cite web|url=http://www.investopedia.com/terms/c/consumer-debt.asp#axzz1VyK6apGi|title=Consumer Debt Definition|publisher=Investopedia|access-date=August 24, 2011}}

The most common forms of consumer debt are credit card debt, payday loans, student loans and other consumer finance, which are often at higher interest rates than long-term secured loans, such as mortgages.

Long-term consumer debt is often considered fiscally suboptimal. While some consumer items such as automobiles may be marketed as having high levels of utility that justify incurring short-term debt, most consumer goods are not. For example, incurring high-interest consumer debt through buying a big-screen television "now", rather than saving for it, cannot usually be financially justified by the subjective benefits of having the television early.

In many countries, the ease with which individuals can accumulate consumer debt beyond their means to repay has led to a growth in the debt consolidation industry and credit counseling.

Debt also leads to a lower credit score and may have effects on mental health.

The amount of debt outstanding versus the consumer's disposable income is expressed as the consumer leverage ratio. On a monthly basis, this debt ratio is advised to be no more than 20 percent of an individual's take-home pay.{{Cite web|url=https://www.moneymanagement.org/Budgeting-Tools/Credit-Articles/Bankruptcy/Alternatives-to-Filing-for-Bankruptcy.aspx|title=Alternatives to Filing for Bankruptcy|website=www.moneymanagement.org|access-date=2016-07-29}} The interest rate charged depends on a range of factors, including the economic climate, perceived ability of the customer to repay, competitive pressures from other lenders, and the inherent structure and security of the credit product. Rates generally range from 0.25 percent above base rate, to well into double figures. Consumer debt is also associated with predatory lending, although there is much debate as to what exactly constitutes predatory lending.

In recent years, an alternative analysis might view consumer debt as a way to increase domestic production, on the grounds that if credit is easily available, the increased demand for consumer goods should cause an increase in overall domestic production. The permanent income hypothesis suggests that consumers take debt to smooth consumption throughout their lives, borrowing to finance expenditures (particularly housing and schooling) earlier in their lives and paying down debt during higher-earning periods.

Personal debt is on the rise, particularly in the United States and the United Kingdom. According to the US Federal Reserve's 2024 statistics, the US household debt service ratio was at its lowest level since its peak in the Fall of 2007 in 2021, but has since risen.{{cite web |author=US Federal Reserve |title=Household Debt Service and Financial Obligations Ratios |url=http://www.federalreserve.gov/releases/housedebt/ |access-date=10 February 2025 |publisher=Household Debt Service and Financial Obligations Ratios}}

Debt-to-GDP ratio, consumer leverage ratio

A country's private debt can be measured as a 'debt-to-GDP ratio', which is the total outstanding private debt of its residents divided by that nation's annual GDP. A variant is the consumer leverage ratio, which is the ratio of debt to personal income.

List of countries

{{Update|part=section|date=March 2021}}

class="wikitable sortable"

|+ List of countries by consumer debt as % of GDP

Country/Region

!1960{{Cite web|url=https://data.worldbank.org/indicator/FS.AST.PRVT.GD.ZS|title=Domestic credit to private sector (% of GDP) | Data}}

!2016{{Cite web|url=https://data.worldbank.org/indicator/FS.AST.PRVT.GD.ZS|title=Domestic credit to private sector (% of GDP) | Data}}

{{flag|Afghanistan}}

| {{spaced en dash}}

| {{nts|003.6}}

{{flag|Albania}}

| {{spaced en dash}}

| {{nts|034.5}}

{{flag|Algeria}}

| {{spaced en dash}}

| {{nts|023.5}}

{{flag|American Samoa}} (US)

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{{flag|Andorra}}

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{{flag|Angola}}

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| {{nts|021.0}}

{{flag|Antigua and Barbuda}}

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| {{nts|048.3}}

{{flag|Argentina}}

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| {{nts|014.0}}

{{flag|Armenia}}

| {{spaced en dash}}

| {{nts|048.9}}

{{flag|Aruba}} (Netherlands)

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{{flag|Australia}}

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| {{nts|142.9}}

{{flag|Austria}}

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| {{nts|085.6}}

{{flag|Azerbaijan}}

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| {{nts|026.6}}

{{flag|Bahamas, The}}

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| {{nts|068.2}}

{{flag|Bahrain}}

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{{flag|Bangladesh}}

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{{flag|Barbados}}

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{{flag|Belarus}}

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| {{nts|025.9}}

{{flag|Belgium}}

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| {{nts|064.7}}

{{flag|Belize}}

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{{flag|Benin}}

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{{flag|Bermuda}} (UK)

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{{flag|Bhutan}}

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{{flag|Bolivia}}

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{{flag|Bosnia and Herzegovina}}

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| {{nts|054.3}}

{{flag|Botswana}}

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| {{nts|032.3}}

{{flag|Brazil}}

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| {{nts|062.2}}

{{flag|British Virgin Islands}} (UK)

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{{flag|Brunei}}

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{{flag|Bulgaria}}

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{{flag|Burundi}}

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{{flag|Cabo Verde}}

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{{flag|Cambodia}}

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{{flag|Cameroon}}

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{{flag|Canada}}

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{{flag|Cayman Islands}} (UK)

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{{flag|Central African Republic}}

| {{nts|011.2}}

| {{nts|012.8}}

{{flag|Chad}}

| {{nts|003.5}}

| {{nts|010.2}}

{{noflag}}Channel Islands (UK)

| {{spaced en dash}}

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{{flag|Chile}}

| {{nts|022.1}}

| {{nts|112.1}}

{{flag|China}}

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| {{nts|156.7}}

{{flag|Colombia}}

| {{nts|022.9}}

| {{nts|047.1}}

{{flag|Comoros}}

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| {{nts|026.5}}

{{flag|Democratic Republic of the Congo|name=Congo, Dem. Rep.}}

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{{flag|Republic of the Congo|name=Congo, Rep.}}

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{{flag|Costa Rica}}

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| {{nts|059.3}}

{{flag|Côte d'Ivoire}}

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{{flag|Croatia}}

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{{flag|Cuba}}

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{{flag|Curaçao}} (Netherlands)

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{{flag|Cyprus}}

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{{flag|Czech Republic}}

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{{flag|Denmark}}

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{{flag|Djibouti}}

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{{flag|Dominica}}

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| {{nts|051.5}}

{{flag|Dominican Republic}}

| {{nts|005.8}}

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{{flag|Ecuador}}

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{{flag|Egypt}}

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{{flag|El Salvador}}

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{{flag|Equatorial Guinea}}

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{{flag|Eritrea}}

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{{flag|Estonia}}

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{{flag|Eswatini|name=Eswatini (Swaziland)}}

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| {{nts|021.6}}

{{flag|Ethiopia}}

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{{flag|Faroe Islands}} (Denmark)

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{{flag|Fiji}}

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| {{nts|089.9}}

{{flag|Finland}}

| {{nts|036.8}}

| {{nts|095.5}}

{{flag|France}}

| {{nts|020.0}}

| {{nts|097.6}}

{{flag|French Polynesia}} (France)

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{{flag|Gabon}}

| {{nts|008.2}}

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{{flag|Gambia, The}}

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{{flag|Georgia (country)|name=Georgia}}

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{{flag|Germany}}

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{{flag|Ghana}}

| {{nts|004.6}}

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{{flag|Gibraltar}}

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{{flag|Greece}}

| {{nts|012.2}}

| {{nts|107.7}}

{{flag|Greenland}} (Denmark)

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{{flag|Grenada}}

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| {{nts|056.1}}

{{flag|Guam}} (US)

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{{flag|Guatemala}}

| {{nts|010.1}}

| {{nts|034.3}}

{{flag|Guinea}}

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| {{nts|012.9}}

{{flag|Guinea-Bissau}}

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| {{nts|007.1}}

{{flag|Guyana}}

| {{nts|011.2}}

| {{nts|045.5}}

{{flag|Haiti}}

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| {{nts|018.3}}

{{flag|Honduras}}

| {{nts|009.9}}

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{{flag|Hong Kong}}

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{{flag|Hungary}}

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| {{nts|034.9}}

{{flag|Iceland}}

| {{nts|046.9}}

| {{nts|087.3}}

{{flag|India}}

| {{nts|007.9}}

| {{nts|049.8}}

{{flag|Indonesia}}

| {{spaced en dash}}

| {{nts|039.4}}

{{flag|Iran}}

| {{nts|012.9}}

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{{flag|Iraq}}

| {{nts|008.5}}

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{{flag|Ireland}}

| {{nts|030.1}}

| {{nts|049.2}}

{{flag|Isle of Man}} (UK)

| {{spaced en dash}}

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{{flag|Israel}}

| {{nts|013.5}}

| {{nts|065.4}}

{{flag|Italy}}

| {{spaced en dash}}

| {{nts|086.1}}

{{flag|Jamaica}}

| {{nts|015.7}}

| {{nts|032.1}}

{{flag|Japan}}

| {{nts|056.3}}

| {{nts|185.0}}

{{flag|Jordan}}

| {{spaced en dash}}

| {{nts|075.1}}

{{flag|Kazakhstan}}

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| {{nts|034.3}}

{{flag|Kenya}}

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| {{nts|032.9}}

{{flag|Kiribati}}

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{{flag|North Korea}}

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{{flag|South Korea}}

| {{nts|005.7}}

| {{nts|143.3}}

{{flag|Kosovo}}

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| {{nts|039.3}}

{{flag|Kuwait}}

| {{spaced en dash}}

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{{flag|Kyrgyzstan}}

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| {{nts|021.2}}

{{flag|Laos}}

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{{flag|Latvia}}

| {{spaced en dash}}

| {{nts|067.4}}

{{flag|Lebanon}}

| {{spaced en dash}}

| {{nts|111.9}}

{{flag|Lesotho}}

| {{spaced en dash}}

| {{nts|017.5}}

{{flag|Liberia}}

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{{flag|Libya}}

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{{flag|Liechtenstein}}

| {{spaced en dash}}

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{{flag|Lithuania}}

| {{spaced en dash}}

| {{nts|043.0}}

{{flag|Luxembourg}}

| {{spaced en dash}}

| {{nts|100.1}}

{{flag|Macau}}

| {{spaced en dash}}

| {{nts|118.1}}

{{flag|Madagascar}}

| {{spaced en dash}}

| {{nts|013.2}}

{{flag|Malawi}}

| {{spaced en dash}}

| {{nts|010.5}}

{{flag|Malaysia}}

| {{nts|008.9}}

| {{nts|124.0}}

{{flag|Maldives}}

| {{spaced en dash}}

| {{nts|037.3}}

{{flag|Mali}}

| {{spaced en dash}}

| {{nts|025.4}}

{{flag|Malta}}

| {{spaced en dash}}

| {{nts|087.1}}

{{flag|Marshall Islands}}

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{{flag|Mauritania}}

| {{spaced en dash}}

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{{flag|Mauritius}}

| {{spaced en dash}}

| {{nts|096.4}}

{{flag|Mexico}}

| {{nts|020.6}}

| {{nts|035.0}}

{{flag|Federated States of Micronesia|name=Micronesia, Fed. Sts.}}

| {{spaced en dash}}

| {{nts|023.4}}

{{flag|Moldova}}

| {{spaced en dash}}

| {{nts|030.6}}

{{flag|Monaco}}

| {{spaced en dash}}

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{{flag|Mongolia}}

| {{spaced en dash}}

| {{nts|058.7}}

{{flag|Montenegro}}

| {{spaced en dash}}

| {{nts|051.2}}

{{flag|Morocco}}

| {{nts|012.0}}

| {{nts|065.4}}

{{flag|Mozambique}}

| {{spaced en dash}}

| {{nts|034.5}}

{{flag|Myanmar}}

| {{nts|006.2}}

| {{nts|020.7}}

{{flag|Namibia}}

| {{spaced en dash}}

| {{nts|056.7}}

{{flag|Nauru}}

| {{spaced en dash}}

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{{flag|Nepal}}

| {{nts|01.0}}

| {{nts|081.0}}

{{flag|Netherlands}}

| {{nts|018.4}}

| {{nts|111.2}}

{{flag|New Caledonia}} (France)

| {{spaced en dash}}

| {{spaced en dash}}

{{flag|New Zealand}}

| {{nts|015.5}}

| {{spaced en dash}}

{{flag|Nicaragua}}

| {{nts|015.4}}

| {{nts|038.7}}

{{flag|Niger}}

| {{spaced en dash}}

| {{nts|013.7}}

{{flag|Nigeria}}

| {{nts|003.7}}

| {{nts|015.7}}

{{flag|North Macedonia}}

| {{spaced en dash}}

| {{nts|047.4}}

{{flag|Northern Mariana Islands}} (US)

| {{spaced en dash}}

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{{flag|Norway}}

| {{nts|032.7}}

| {{nts|145.0}}

{{flag|Oman}}

| {{spaced en dash}}

| {{nts|075.6}}

{{flag|Pakistan}}

| {{nts|011.1}}

| {{nts|016.2}}

{{flag|Palau}}

| {{spaced en dash}}

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{{flag|Palestine|name=Palestinian territories}}

| {{spaced en dash}}

| {{nts|042.0}}

{{flag|Panama}}

| {{nts|017.8}}

| {{nts|091.0}}

{{flag|Papua New Guinea}}

| {{spaced en dash}}

| {{spaced en dash}}

{{flag|Paraguay}}

| {{nts|009.1}}

| {{nts|054.4}}

{{flag|Peru}}

| {{nts|012.5}}

| {{nts|036.2}}

{{flag|Philippines}}

| {{nts|012.0}}

| {{nts|044.7}}

{{flag|Poland}}

| {{spaced en dash}}

| {{nts|054.8}}

{{flag|Portugal}}

| {{nts|039.5}}

| {{nts|112.2}}

{{flag|Puerto Rico}} (US)

| {{spaced en dash}}

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{{flag|Qatar}}

| {{spaced en dash}}

| {{nts|079.4}}

{{flag|Romania}}

| {{spaced en dash}}

| {{nts|028.2}}

{{flag|Russia}}

| {{spaced en dash}}

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{{flag|Rwanda}}

| {{spaced en dash}}

| {{nts|021.2}}

{{flag|Samoa}}

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| {{nts|080.1}}

{{flag|San Marino}}

| {{spaced en dash}}

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{{flag|São Tomé and Príncipe}}

| {{spaced en dash}}

| {{nts|026.4}}

{{flag|Saudi Arabia}}

| {{spaced en dash}}

| {{nts|058.0}}

{{flag|Senegal}}

| {{nts|014.8}}

| {{nts|033.1}}

{{flag|Serbia}}

| {{spaced en dash}}

| {{nts|044.1}}

{{flag|Seychelles}}

| {{spaced en dash}}

| {{nts|026.9}}

{{flag|Sierra Leone}}

| {{nts|002.8}}

| {{nts|005.6}}

{{flag|Singapore}}

| {{spaced en dash}}

| {{nts|132.9}}

{{flag|Sint Maarten}} (Netherlands)

| {{spaced en dash}}

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{{flag|Slovakia}}

| {{spaced en dash}}

| {{nts|057.1}}

{{flag|Slovenia}}

| {{spaced en dash}}

| {{nts|047.4}}

{{flag|Solomon Islands}}

| {{spaced en dash}}

| {{nts|039.0}}

{{flag|Somalia}}

| {{spaced en dash}}

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{{flag|South Africa}}

| {{spaced en dash}}

| {{nts|144.7}}

{{flag|South Sudan}}

| {{spaced en dash}}

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{{flag|Spain}}

| {{nts|031.4}}

| {{nts|111.8}}

{{flag|Sri Lanka}}

| {{nts|007.3}}

| {{nts|046.0}}

{{flag|St. Kitts and Nevis}}

| {{spaced en dash}}

| {{nts|056.5}}

{{flag|St. Lucia}}

| {{spaced en dash}}

| {{nts|086.8}}

{{flag|Collectivity of Saint Martin}} (France)

| {{spaced en dash}}

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{{flag|St. Vincent and the Grenadines}}

| {{spaced en dash}}

| {{nts|050.8}}

{{flag|Sudan}}

| {{nts|08.9}}

| {{nts|08.9}}

{{flag|Suriname}}

| {{spaced en dash}}

| {{nts|033.3}}

{{flag|Sweden}}

| {{nts|038.2}}

| {{nts|129.6}}

{{flag|Switzerland}}

| {{nts|096.0}}

| {{nts|177.7}}

{{flag|Syria}}

| {{nts|025.3}}

| {{spaced en dash}}

{{flag|Taiwan}}

| {{spaced en dash}}

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{{flag|Tajikistan}}

| {{spaced en dash}}

| {{nts|019.2}}

{{flag|Tanzania}}

| {{spaced en dash}}

| {{nts|014.3}}

{{flag|Thailand}}

| {{nts|010.1}}

| {{nts|147.4}}

{{flag|Timor-Leste}}

| {{spaced en dash}}

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{{flag|Togo}}

| {{spaced en dash}}

| {{nts|039.3}}

{{flag|Tonga}}

| {{spaced en dash}}

| {{nts|038.1}}

{{flag|Trinidad and Tobago}}

| {{nts|008.5}}

| {{nts|041.3}}

{{flag|Tunisia}}

| {{spaced en dash}}

| {{nts|081.2}}

{{flag|Turkey}}

| {{nts|017.7}}

| {{nts|070.3}}

{{flag|Turkmenistan}}

| {{spaced en dash}}

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{{flag|Turks and Caicos Islands}} (UK)

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{{flag|Tuvalu}}

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{{flag|Uganda}}

| {{nts|006.5}}

| {{nts|013.7}}

{{flag|Ukraine}}

| {{spaced en dash}}

| {{nts|047.3}}

{{flag|United Arab Emirates}}

| {{spaced en dash}}

| {{nts|085.9}}

{{flag|United Kingdom}}

| {{nts|017.6}}

| {{nts|135.9}}

{{flag|United States}}

| {{nts|070.9}}

| {{nts|192.7}}

{{flag|Uruguay}}

| {{nts|031.0}}

| {{nts|028.2}}

{{flag|Uzbekistan}}

| {{spaced en dash}}

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{{flag|Vanuatu}}

| {{spaced en dash}}

| {{nts|068.5}}

{{flag|Venezuela}}

| {{nts|014.0}}

| {{spaced en dash}}

{{flag|Vietnam}}

| {{spaced en dash}}

| {{nts|123.8}}

{{flag|US Virgin Islands}} (US)

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{{flag|Yemen}}

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{{flag|Zambia}}

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| {{nts|013.0}}

{{flag|Zimbabwe}}

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See also

Further reading

  • {{cite book|title=Surviving Debt|url=https://library.nclc.org/book/surviving-debt|publisher=National Consumer Law Center|isbn=978-1-60248-213-5|year=2024}} - a freely available guide to managing consumer debt, aimed at consumers

References

{{Reflist}}

External links

  • Current rates from the World Bank
  • [http://www.federalreserve.gov/releases/g19/current/default.htm U.S. consumer credit outstanding]
  • [http://news.bbc.co.uk/1/hi/in_depth/business/borrowing_debt/default.stm In-depth reports on debt and borrowing in the United Kingdom]

{{Consumer debt}}

{{Debt}}

{{Consumer behaviour}}

Category:Debt

Category:Financial economics

Category:Consumption (macroeconomics)