Consumer debt is a personal obligation owed to a financial entity, such as a bank, a credit union, or the federal government. The purchases acquired through consumer debt are fully accessible without having to pay for them beforehand.
As we will discuss in the consumer debt facts and figures listed below, the US is among the top countries that have racked up enormous debt. Even though their disposable income has grown over time, Americans keep borrowing money from financial institutions.
So, how does consumer debt affect your finances? Let’s find out.
Top Consumer Debt Statistics: Editor’s Choice
- Consumer debt in the US increased at an annual rate of 10% in May 2021.
- In February 2020, revolving debt reached a record of $1.1 trillion.
- About 61% of Americans have at least one credit card.
- The average credit card balance stood at $5,315 in 2020.
- People aged 45–54 have a credit card debt of $7,670 on average.
- The total household debt in America stands at $14.64 trillion.
- In the third quarter of 2020, the Canadian household debt ratio hit 170.7%.
- The American student loan debt amounts to over $1.71 trillion.
- Nearly 60% of Americans in debt feel anxious about their situation.
- Gen Xers are in debt of around $6 trillion.
General Consumer Debt Trends and Stats
After a year of financial turmoil caused by the pandemic, revolving debts such as credit card balances had rapidly dropped in 2020. On the other hand, other types of consumer debt such as mortgages, auto loans, and student loans, also known as non-revolving debts, have grown since the previous year.
1. In the US, consumer debt increased at a seasonally adjusted annual rate of 10% in May 2021.
The total consumer debt for 2021 did not experience a considerable change since last year’s $4.2 trillion record. This is an achievement that America managed to reach just right before COVID-19 broke in. Consumer debt, together with consumer spending, encountered a crisis in response to the pandemic outbreak, jeopardizing the local economy as a result.
Today, the total consumer debt in America has started to grow back again, recovering the record established during the pre-pandemic period.
2. In February 2020, revolving debt amounted to a record $1.1 trillion.
As mentioned earlier, revolving debt mainly involves credit card debt.
In May 2021, the overall deficit has grown by 11.4% to around $974 billion—this came after a 3.4% decline in the first quarter.
Even with the May debt growth, the credit statistics for 2021 still indicate a remarkable decrease in debt compared to 2020.
3. Non-revolving debt has reached a staggering 76% of all consumer debt.
For the most part, non-revolving debt comprises student and auto loans. In February, the percentage of Americans in debt has grown by 7.3% to over a whopping $3.2 trillion.
While the total student loan debt amounted to $1.7 trillion in December 2020, auto loans stood at $1.2 trillion. Unfortunately, no data is available for January and February 2021.
4. Americans need to set aside 33% of their monthly income for paying debts.
US consumer debt statistics reveal that around a third of their monthly income goes toward paying debts, excluding mortgages.
While the latest data suggests that Americans have been making progress in reducing their debt, about 13% of them will probably be stuck with it for the rest of their lives.
5. In 2020, the US consumer debt chart showed that debt in America accounted for around 78% of the GDP.
In the last quarter of 2020, Trading Economics’ report proves that this rate has been higher than the last three years. The previous year this figure was only at about 74%.
As the US GDP is calculated quarterly, this is the latest statistics we have found.
Credit Card Debt Statistics
When it comes to consumer debt, consider that credit card balance makes up a huge piece of the overall American debt.
Now, let’s take a closer look at the statistics and facts about the average American credit card debt.
6. About 61% of Americans possess at least one credit card.
It shouldn’t come as a surprise that clients with higher FICO scores tend to have more than one credit card. Nowadays, the amount of credit card owners is continually growing.
People experiencing wage stagnation will strive to minimize their expenses by requesting credit cards with low or zero interest. Thus, debt statistics in America show that credit cards can be really beneficial for people in difficult situations.
7. The average credit card balance was $5,315 in 2020.
In the last few months, US consumers have radically changed their financial habits. Since the beginning of COVID-19, clients are either paying their debt or not adding to their existing balance.
The average American debt statistics indicate that credit card debt has dramatically decreased by 14%, compared to the $6,193 reported in the previous year. While Americans see their temporary debt diminishing, their FICO scores are steadily rising.
8. On average, the credit card debt is $7,670 for people aged 45–54.
Customers between 45 and 54 years old carry the highest average credit card debt by age, at a rate of 51.7%. In the second place, people aged 35–44 make up 50.5% of the overall credit card debt, with an average of $5,990. People younger than 35 constitute 47.6% of debt holders, with an average of $3,660.
9. According to consumer debt statistics, the average American has four credit cards.
Yet, Americans have depended less and less on credit card debt since 2019. This is primarily due to the financial instability that originated from the coronavirus outbreak.
However, owning more credit cards will help them increase rewards, annual statement credits, FICO scores, and interest-free financing.
Household Debt Statistics
When you think about household debt, you consider consumer debt and mortgage loans as the main components.
Especially in the US, it is fundamental to diminish this debt to recover the local economy.
10. The total household debt in America stands at $14.64 trillion.
The US household debt increased by $85 billion (0.6%) in the first quarter of 2021, primarily because of an unexpected increase in mortgage balances.
As the largest component of household debt, mortgages increased by $117 billion.
11. In 2020, Americans paid $83 billion in credit card debt.
The average household credit card debt dropped to $8,089. With the ongoing crisis, it’s not surprising that consumers are gradually paying off their debts and saving more than they have ever done in the last decade.
In this sense, the disturbance caused by the COVID-19 pandemic has unexpectedly pushed people to do better budgeting.
12. In 2019, the national debt per household was $140,416.
Additionally, the median was approximately $65,000, including various debts, such as mortgages, personal loans, credit cards, and everything that concerns the entire family debt.
In 2020, consumer debt trends demonstrate that the average household debt was about $145,000, while the median consumer debt amounted to roughly $67,000.
13. Americans spend 8.69% of their income on debt payments.
This figure has seen a 1% drop since last year, and here’s why—the income loss caused by the coronavirus granted debt relief programs and other allowances.
The ideal US household debt-to-income ratio (DTI) for a household must be lower than 36%, with no more than 28% of the debt going into mortgages.
14. In 2019, Hong Kong carried the highest household debt valued at 236% of the country’s output.
According to Statista, Hong Kong had the highest household debt globally. Consider that the total household debt by country is measured as a share of Gross Domestic Product (GDP).
The US held the second-highest household debt, at a rate of about 192%. Japan and Switzerland come in third and fourth place, respectively, with approximately 175% debt.
15. In Canada, the household debt ratio climbed to 170.7% in Q3 2020.
According to consumer debt statistics, Canada owed an average of $1.71 for every dollar of disposable income in the third quarter of 2020.
In other words, the total household debt increased at a higher ratio than 162.8% in the second quarter. Yet, it is still lower than 181% of the pre-pandemic period.
As a result, the overall global consumer debt has increased because of the current fall in revenues and the expensive pandemic relief measures.
Student and Personal Debt Statistics
Nowadays, many Americans take loans for their education, hoping for a more profitable and successful future.
Especially during this troubling period, millennials and Gen Z are the generations bearing the dreadful consequences of this debt.
16. Americans owe more than $1.71 trillion in student loan debt.
In America, many students rely on loans to get higher education. Consumer debt statistics prove, however, that the current pandemic, the rising education costs, and the stagnant wages will only worsen this debt over the years.
This figure has widely increased since last year. The total student debt amounted to $1.57 trillion in 2020.
17. Around 16% of indebted students need their parents to help pay off their loans.
Personal debt statistics demonstrate that about 16% of Americans say their parents help them with their loans.
Millennials and Gen Z, in particular, need parental help at a higher rate than average—19% and 31%, respectively. Thankfully, many Americans receive financial support from their families.
18. The UK’s government forecasts that only 25% of undergraduates will repay their loans.
The national consumer debt statistics reveal that the British government loans over £17 billion to more than 1.3 million students every year. As of March 2020, the total student loans reached a whopping £140 billion.
Yet, the government expects that only 25% of undergrads can fully pay their debt. This rate is much lower than the 30% registered in the previous year.
Additional US Debt Statistics and Facts
After getting a better understanding of the different types of consumer debt and how it works, get ready for some more exciting data.
19. Around 80% of Americans are currently in debt.
In America, debt is out of control. In fact, plenty of people are feeling trapped because of their current financial situation.
Yet, what percentage of America is actually debt-free? Only 20% of Americans do not owe money to any institution, proving that the remaining percentage is drowning in debt.
Whether it is a mortgage or a student loan, all these payments keep many people from living a worry-free and comfortable life.
20. About 60% of Americans feel anxious about the level of their debt.
One of the most saddening facts about debt in America is that the majority of the respondents feel that their financial situation impacts their mood negatively.
On top of that, the current condition is so critical that 31% of people feel depressed at least once a month. Additionally, about 21% say it creates distress in the relationship with their partner, while 19% agree it affects their job performance.
21. Consumer debt facts state that 49% of people with credit card debt blame themselves for their situation.
Mortgages and student loans are seen as necessary for building people’s future, so respondents don’t feel as guilty.
However, about half of the people with a credit card balance feel entirely responsible for the condition they put themselves in.
What’s more, credit card debt statistics demonstrate that 69% of people who struggle with paying off their debt feel embarrassed about their state.
22. In the US, Gen X owes a total debt of nearly $6 trillion.
Surprisingly, Gen X carries the highest level of debt out of all other generations. Nevertheless, consumer debt statistics by the Federal Reserve bring relatively positive news. This number has been somewhat constant over the past years.
On the other hand, the youngest generations, Gen Z and millennials, are rapidly increasing their debt levels.
23. Mortgage balances account for 69% of the total household debt.
The most significant component of household debt is mortgage debt. In 2020, the total US mortgage debt reached an all-time high of $14.56 trillion.
In the third quarter of 2020, mortgage originations, which comprise newly originated mortgages and refinances, grew up to $1.2 trillion. Only in the previous quarter, mortgages stood at $752 billion.
24. In 2020, the average debt per person was around $26,621.
Mortgages excluded, the consumer debt by year is remarkably going down. In 2019, the total debt per person was $29,800. Undoubtedly, the financial situation in America is getting better over the past few years. However, the majority of indebted people still suffer significantly because of their debts.
25. The total consumer debt is $1.6 trillion higher than the previous peak of $12.68 million during the financial crisis.
Consumer debt statistics of 2008 indicate that the total consumer debt has reached its highest peak during the financial crisis. However, according to the New York Federal Reserve report, total household debt rose $155 billion in 2020, suggesting that the pandemic contributed to a much higher increase in total consumer debt.
Consumer Debt Statistics: The Takeaway
In the US, consumer debt has reached outstanding records over the past years. Yet, the coronavirus outbreak is somewhat responsible for stopping or even reducing the total consumer debt. Although this figure has considerably dropped since the beginning of the pandemic, the debt rate in America is still making up a considerable segment of Americans’ income.
While some debt, such as student loans or mortgages, might be inevitable, you can still start doing better budgeting to avoid drowning in debt.
Frequently Asked Questions
How many Americans are in debt?
To illustrate, about 8 in 10 people own some kind of debt. Most households aren’t making ends and are living paycheck to paycheck. This means that if there was some kind of emergency, they wouldn’t have been able to pay for it.
And while this might come as a shock, a huge number of people are paying debts for the rest of their life. However, it’s interesting that they are trying to reduce consumption and only borrow during bad times.
Are student loans consumer debt?
Consumer debt involves all kinds of debt that an individual or a household owes to the federal government, credit unions, banks, or other financial institutions. Credit card balances, personal debt, and mortgages are all consumer debt components. In addition, even student loans are considered a part of consumer debt.
While Americans can easily avoid consumer debt for personal loans, student loans are more than necessary for their education. So, not only are student loans consumer debt, but they also account for a good part of it.
What is the average consumer debt?
It’s no surprise that consumer debt has become an integral part of the American lifestyle. The 2019 data from Experian can give you a clear picture of the total debt for each American. According to Experian, the average American carries a whopping $90,460 of debt, including all types of debt, or better mortgages, household debts, personal debts, and student loans.
This suggests that Americans appreciate having their own property and good education. That’s why consumer debt is necessary for many people who cannot afford to invest in these services.
Has consumer debt increased?
It’s not a secret that consumer debt in the US is constantly on the rise. In the last quarter of 2020, the Federal Reserve claimed that the total consumer debt reached almost $14.6 trillion.
What’s more, mortgage debt alone overcame $10 trillion. Moreover, this figure has been rising at the fastest rate since 2006. These numbers demonstrate that purchasing houses is something Americans cannot live without, undergoing the risk of an unstable financial situation.
What is the average Canadian consumer debt?
In the second quarter of 2020, the agency Equifax Canada stated that the total consumer debt in the country increased by 2.8% to a whopping $1.99 trillion.
Due to the constant rising of mortgage originations, the average Canadian had a debt of $73,532, a 2.2% increase since the previous year. Despite the influence of the ongoing coronavirus, the total consumer debt in Canada didn’t stop growing. Just like Americans, Canadians highly rely on consumer loans.
Which country has the most consumer debt?
According to the latest consumer debt statistics by Statista, the countries with the highest consumer debt rate are Hong Kong (235.72%), the US (191.81%), and Japan (174.72%).
Switzerland comes right after at 174.6%, followed by China at 164.66% and Denmark at 159.72%.
These are not surprising numbers, considering that people are willing to get in debt for important matters such as purchasing a house or getting the best education.
Sources
BNN Bloomberg, CNB, CNBC, Experian, Federal Reserve, Federal Reserve, Federal Reserve Bank of New York, Forbes, Fox Business, House of Commons Library, Investopedia, Investopedia, Northwestern Mutual, Ramsey Solutions, Statista, Student Loan Hero, The Ascent, The Balance, Trading Economics, ValuePenguin