How much debt is the average American in?
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.
Here's a look at how much nonmortgage debt Americans have by age group, and the average non-mortgage per capita debt for each group: 18-29-year-olds: $69 billion total, $12,871 average. 30-39-year-olds: $1.17 trillion, $26,532 average.
| Generation | Average credit card debt |
|---|---|
| Baby boomers (58–76) | $6,245 |
| Generation X (42–57) | $8,134 |
| Millennials (26–41) | $5,649 |
| Generation Z (19–25) | $2,854 |
Now that we've defined debt-to-income ratio, let's figure out what yours means. Generally speaking, a good debt-to-income ratio is anything less than or equal to 36%. Meanwhile, any ratio above 43% is considered too high. The biggest piece of your DTI ratio pie is bound to be your monthly mortgage payment.
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.
$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.
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. The exact definition of debt free can vary, though, depending on whom you ask.
Running up $50,000 in credit card debt is not impossible. About two million Americans do it every year. Paying off that bill? Well, that's not impossible either, though it is considerably less fun.
Having any credit card debt can be stressful, but $10,000 in credit card debt is a different level of stress. The average credit card interest rate is over 20%, so interest charges alone will take up a large chunk of your payments. On $10,000 in balances, you could end up paying over $2,000 per year in interest.
Even a dollar amount that might not seem high could have a negative impact on your credit score if the credit limit on your credit card is also low. For example, a $300 balance on a credit card with a $400 credit limit would result in a 75% credit utilization rate and would likely hurt your credit score.
What is unmanageable debt?
Personal debt can be considered to be unmanageable when the level of required repayments cannot be met through normal income streams. This would usually occur over a sustained period of time, causing overall debt levels to increase to a level beyond which somebody is able to pay.
- 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.
Americans are tumbling deeper into debt, with the typical household paying $1,583 a month on various loans, a recent study found. That's a more than $300 increase from people's average monthly debt payment in 2020, according to LendingTree.
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.
The largest percentages of the average consumer debt balance are mortgages.
The Standard Route is what credit companies and lenders recommend. If this is the graduate's choice, he or she will be debt free around the age of 58. It will take a total of 36 years to complete. It's a whole lot of time but it's the standard for a lot of people.
It will take 47 months to pay off $20,000 with payments of $600 per month, assuming the average credit card APR of around 18%. The time it takes to repay a balance depends on how often you make payments, how big your payments are and what the interest rate charged by the lender is.
According to the Experian 2020 State of Credit report, the average Gen X consumer has about $32,878 in non-mortgage debt, such as credit cards, student loans, car loans and/or personal loans. Gen X homeowners have an average mortgage balance of $245,127.
- Pay more than the minimum payment every month. ...
- Tackle high-interest debts with the avalanche method. ...
- Set up a payment plan. ...
- Put extra money toward paying off your debts. ...
- Start a side hustle. ...
- Limit unnecessary spending. ...
- Don't let your debt hit collections.
On average, men have more debt than women across all categories, except for student loans. While there isn't much data yet, early studies have shown that nonbinary students undergo more financial strain than their cisgender peers, and are more likely to have student loan debt.
What is the average credit score in the US?
The average FICO credit score in the US is 718, according to the latest FICO data from April 2023. 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.
Both median and average family net worth surged between 2019 and 2022, according to the U.S. Federal Reserve. Average net worth increased by 23% to $1,063,700, the Fed reported in October 2023, the most recent year it published the data. Median net worth, on the other hand, rose 37% over that same period to $192,900.
Nearly half, or 49%, of credit card holders carry debt from month to month on at least one card, up from 46% last year, the report found, and 56 million cardholders have been in debt for at least a year.
The minimum payment mindset
Here's how most people get trapped in credit card debt: You use your card for a purchase you can't afford or want to defer payment, and then you make only the minimum payment that month. Soon, you are in the habit of using your card to purchase things beyond your budget.
In terms of savings accounts specifically, you'll likely find different estimates from different sources. The average American has $65,100 in savings — excluding retirement assets — according to Northwestern Mutual's 2023 Planning & Progress Study. That's a 5% increase over the $62,000 reported in 2022.
