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Americans have less personal debt than they did before the pandemic, according to data showing the average adult owes a little under $22,000.
Research from financial services company Northwestern Mutual found that excluding mortgages, the average personal debt per individual sat at $21,800 in 2023, significantly lower than the $29,800 recorded in 2019.
At the same time, Americans have wildly different experiences with their debt: While more than a third of Americans said they’re carrying their highest level of debt ever, an even greater share reported the opposite. The latest New York Federal Reserve data also shows that rising credit card debt and auto loans helped push U.S. household debt to new records in the fourth quarter of 2023.
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Average debt levels
Northwestern Mutual and the Harris Poll interviewed 2,740 U.S. adults online between mid-February and early March of 2023. Here are some of the findings:
- Despite persistently high inflation in recent times, the study showed average personal debt among U.S. adults, not including mortgages, has dropped steadily over the past four years.
- The average American in 2023 carried $21,800 in personal debt (excluding mortgages), a whopping $8,000 less than what Northwestern Mutual recorded in 2019.
- Personal debt for many Americans is decreasing: 43% percent said they have the lowest or close to the lowest debt they’ve ever carried.
- However, 35% of Americans reported that they’re in the most debt of their lives. New York Fed data shows that U.S. household debt swelled to $17.5 trillion last quarter, with credit card balances making up about $1.13 trillion of it — a new high for credit card debt.
- Unsurprisingly, younger generations struggle the most with student loan debt, the Northwestern Mutual study found: 5% of survey participants overall said personal education loans were their top source of debt. That percentage increases to 17% for Gen Z and 10% for millennials.
- Those with personal debt said on average that 30% of their monthly income goes to paying it off.
- Nearly half (49%) of survey respondents said they expect to pay off their debt within one to five years, while 39% expect it to take longer — perhaps even a lifetime.
Top sources of personal debt
Credit cards are the main source of debt for U.S. adults, accounting for more than double any other source cited by survey respondents.
- Credit cards (28%)
- Car loans (12%)
- Medical debt (7%)
- Home equity loans / lines of credit (6%)
- Personal education loans (5%)
- Educational expenses for children or family members (3%)
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Progress on paying off debt
Americans have been making consistent progress when it comes to paying off their debts, according to the survey, even reducing what they owe over the course of a period of historic inflation. While the report didn't explore how Americans are paying down debt, the data shows the average debt per individual declined the most (by $6,475) between 2019 and 2021. By comparison, debt per individual dropped by $1,525 between 2021 and 2023.
During those early pandemic years, many workers grew their savings and eliminated debt by spending less money, working remotely and stashing away their stimulus checks. In surveys, many people say they used their stimulus checks for savings or paying off debt.
Even though the report suggests Americans are reducing their debt overall, that doesn’t mean everyone’s circ*mstances are alike, as shown by the survey’s divide between those who say they owe the most or least debt ever.
In fact, U.S. household debt grew by $16 billion between April and June of 2023, according to the New York Fed, driven in large part by high interest rates on credit cards: The average credit card APR now sits at more than 20%. Auto loan balances also increased by $20 billion in that time thanks to inflation and high interest rates. Delinquencies related to credit card debt and auto loan debt have been rising recently as well.
Regardless, Americans should do their best to stick to their repayment strategies to continue the trend of consistent declines in debt levels recorded by the Northwestern Mutual study.
"It can be a slippery slope between manageable debt and runaway debt, so it's an important time to remain extra vigilant about planning and spending," Christian Mitchell, chief customer officer at Northwestern Mutual, said in a news release.
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FAQs
The average debt an American owes is $104,215 across mortgage loans, home equity lines of credit, auto loans, credit card debt, student loan debt, and other debts like personal loans. Data from Experian breaks down the average debt a consumer holds based on type, age, credit score, and state.
How much debt does the average American have? ›
Key Takeaways. The average American debt (per U.S. adult) is $66,772. Each student loan borrower owes an average of $38,290. The typical household in the U.S. has nearly $36,357 in car debt.
What is the average debt for Gen Z? ›
Average Credit Card Debt by Age: Gen Z (Ages 18-27)
Even so, the average credit card debt for Gen Zers was $2,854 in the third quarter of 2022, according to Experian. A year later it had risen 14.3% to $3,262.
How much debt does the average 40-year-old have? ›
Average total debt by age and generation
| Generation | Ages | Credit Karma members' average total debt |
|---|
| Millennial (born 1981–1996) | 27–42 | $48,611 |
| Gen X (born 1965–1980) | 43–58 | $61,036 |
| Baby boomer (born 1946–1964) | 59–77 | $52,401 |
| Silent (born 1928–1945) | 78–95 | $41,077 |
1 more rowApr 29, 2024
Average Credit Card Balance by Generation
| Generation | Average Credit Card Debt |
|---|
| Millennials | $6,521 |
| Generation X | $9,123 |
| Baby boomers | $6,642 |
| Silent generation | $3,412 |
1 more rowMar 12, 2024
Around 23% of Americans are debt free, according to the most recent data available from the Federal Reserve. That figure factors in every type of debt, from credit card balances and student loans to mortgages, car loans and more.
How many people are debt free? ›
What percentage of America is debt-free? According to that same Experian study, less than 25% of American households are debt-free. This figure may be small for a variety of reasons, particularly because of the high number of home mortgages and auto loans many Americans have.
What age group has the most average debt? ›
Generation X Debt
Gen X (ages 43 to 58) not only carries the most debt on average of all the generations, but is also the debt leader in credit card and total non-mortgage debt.
What generation has the most debt? ›
Key statistics
- People aged 40-49 hold the highest amount of debt with $4.21 trillion in total.
- By 2030, Millennials (born between 1981 to 1996) are expected to have the most total debt at an average of $228,891 per person.
Young members of Gen Z are struggling more financially today than Millennials did at their age 10 years ago, according to a new study published last week by the credit reporting agency TransUnion.
A good goal is to be debt-free by retirement age, either 65 or earlier if you want. If you have other goals, such as taking a sabbatical or starting a business, you should make sure that your debt isn't going to hold you back.
How many Americans live paycheck to paycheck? ›
How Many Americans Are Living Paycheck to Paycheck? A 2023 survey conducted by Payroll.org highlighted that 78% of Americans live paycheck to paycheck, a 6% increase from the previous year. In other words, more than three-quarters of Americans struggle to save or invest after paying for their monthly expenses.
Which gender has more debt? ›
Women are stereotypically seen as irresponsible spenders, but the data doesn't back this up. According to a 2019 Experian study, men carry more debt than women across nearly all categories, including credit card debt — the study found that men have $125 more in credit card debt than women on average.
What is the average credit score in America? ›
The average FICO credit score in the US is 717, according to the latest FICO data. The average VantageScore is 701 as of January 2024. Credit scores, which are like a grade for your borrowing history, fall in the range of 300 to 850. The higher your score, the better.
Is 5000 credit card debt a lot? ›
$5,000 in credit card debt can be quite costly in the long run. That's especially the case if you only make minimum payments each month. However, you don't have to accept decades of credit card debt. There are a few things you can do to pay your debt off faster - potentially saving thousands of dollars in the process.
Is 20k in credit card debt a lot? ›
“That's because the best balance transfer and personal loan terms are reserved for people with strong credit scores. $20,000 is a lot of credit card debt and it sounds like you're having trouble making progress,” says Rossman.
Are 80% of Americans in debt? ›
Overall, 80 percent of Americans hold some form of debt, whether mortgages, car loans, unpaid credit card balances, medical and legal bills, student loans, or a combination of those.
What is considered a lot of debt? ›
Debt-to-income ratio is your monthly debt obligations compared to your gross monthly income (before taxes), expressed as a percentage. A good debt-to-income ratio is less than or equal to 36%. Any debt-to-income ratio above 43% is considered to be too much debt.
What percentage of Americans have no savings? ›
As of May 2023, more than 1 in 5 Americans have no emergency savings. Nearly one in three (30 percent) people in 2023 had some emergency savings, but not enough to cover three months of expenses. This is up from 27 percent of people in 2022. Note: Not all percentages total 100 due to rounding.
