What Are the Causes of Consumer Debt?


Consumer debt happens for a variety of reasons. It could happen because of poor money management, job losses, health crises or other causes. Consumer debt can devastate families and ruin chances of getting more credit.


  • When a person loses his or her job, it causes consumer debt to increase. Depending on how long it takes to find more work, the debt will eventually decrease emergency savings, and since unemployment benefits often don't last long, the person will struggle with paying debts.

Poor Money Management

  • Another major cause of consumer debt is poor money management. When a person lives above his or her means or doesn't pay bills on time, this impacts the amount of debt he or she accumulates.

Lack of Financial Literacy

  • This is a common cause of debt for young consumers, especially if they're in college and have their first credit card. Young people should educate themselves on the importance of credit scores, how to read a credit report, how to budget money, and the importance of making timely payments.

Feeling of Instant Gratification

  • Another cause of consumer debt is the idea of getting what you want right now and not having to earn or save for things. This is bad thinking because you don't learn self-discipline and you develop a sense of entitlement rather than a sense of accomplishment.


  • While having credit is a beneficial thing, you should also practice self-control in your spending and learn as much as possible about managing money. You can find books and websites that will help you do this.

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