Why the average American may be worse off than Greece

Between its government and its banks, Greece owes 323 billion euros to creditors and its debt-to-income (GDP) ratio is 177%, according to Trading Economics. In other words, Greece owes 1.77 euros for every euro it earns. The average U.S. household, by comparison, owed $204,992 in mortgages, credit cards, and student loans in mid-2015 on a median household income of $55,192, according to data compiled by Sentier Research. This translates to a debt-to-income ratio of 370%, which is much worse than Greece!

In addition, indebted U.S. households carry an average credit card balance of $15,706, according to NerdWallet. Now consider that on average Greece pays only 2.6% of GDP in interest on its debt, according to estimates by think-tank Bruegel cited by The Telegraph. By contrast, the national average interest rate on a U.S. credit card is 15%, according to a report by CreditCards.com, which means $2,355 of annual interest on a balance of $15,706 and 4.2% of median income. This spikes even more sharply on higher interest credit cards, or in the case of a missed payment, which can lead to nearly 30% in interest and therefore 8.5% of median income.