Statistics

• It's helpful to look at some statistics about the effect of consumer debt on the economy as a whole as well on each individual. Consumers held $2.4 trillion in debt as of 2010, according to Money Zine. That works out to $7,800 per person. Of the total consumer debt, an estimated $1.117 trillion was credit card debt, which is one of the most expensive types of debt balances to hold. Rising consumer debt helps fuel the economy but also burdens each individual in a number of ways.
  
  

Hard to Save

• One of the effects of consumer debt is that it inhibits your ability to build wealth. When you're making regular monthly payments on consumer debt accounts, it's difficult to save toward your future. Consumer debt deducts from your overall net worth and financial health. Even when you do have balances in savings accounts, if the rates on your debt balances exceed the interest rates on savings, you are effectively losing money each year that goes by.
  
  

Difficult to Get Credit When Needed

• When you're burdened with a large amount of consumer debt, especially if it's unsecured, you can find it very difficult to get new credit when you really need to borrow for life needs. For instance, if you need a loan to start a business or buy a new car, you might have trouble getting approved if you already have a large amount of debt.
  
  

Leveraging

• One potentially positive effect of consumer debt is that it can help generate new income. When a consumer uses debt to create new wealth, it's called leveraging. For instance, when you use credit card funds to invest in stocks or stock options and then earn large gains, that is an example of leveraging your debt. Of course, this is also a very chancy proposition because investing is a high-risk activity. Borrowing to start a business or buy a house (which appreciates over time) is another way to leverage debt.