Average American Debt – How Do You Compare?

average American debt

Keeping up with economic trends can make you anxious about your money decisions. Still, it’s important to be aware of the situation around you regarding your finances. 

Looking at personal finance statistics can help you avoid bad financial situations. General statistics provide a baseline for assessing your financial health. Especially when it’s about debt, you can see where you stand in the broader economic trend and pull yourself out.

As credit has become more available to Americans, it has helped them to buy homes, cars, and other goods. However, this increase in credit availability has also normalized the amount of debt that Americans have. Currently, consumer debt in the U.S. is $16.5 trillion, with the average American debt among consumers over $100K.

Here’s a breakdown of all debt acquired nationally on average and how you compare to every American out there to pay it back! 

How much is the average American debt? 

According to an Experian study for debt in 2022, many Americans owe money on credit cards, and found that 340 million Americans are currently carrying some form of debt.

The report states that the average debt per individual in the U.S. has surpassed $100,000 for Americans who live in major cities. This is a national average, but the average debt balance differs greatly depending on where you live in the United States. 

With mortgage rates, house prices, and higher interest rates driving debt levels everywhere faster than in previous years, there is reason to believe that these city disparities will widen in the years to come.

How many Americans are currently in debt? 

The percentage of Americans in debt varies depending on the reported debt type. It’s a given that many Americans carry credit card debt. A study found that 340 million Americans currently carry some form of debt. 

According to the same study, only 25% of American households are debt-free. The figure for consumer credit is small compared to other economic indicators, likely because of Americans’ high number of home mortgages and auto loans.

A breakdown of different types of debt  

While the collective figures might be getting you worried, it’s obvious that not all Americans hold the same type of debt. So here’s a breakdown of all common debt types to help you understand which categories you fall into.

1. Credit card debt 

Credit card debt rose for years after COVID-19 but is currently in decline.

Experian found that average consumer credit card balances decreased by 1.8% in 2021. In 2021, the average U.S. consumer had $5,221 in credit card debt. Credit card balances are trending in the right direction since people have realized that carrying a credit balance with interest is a risk.

Along with that, multiple factors likely contributed to the decrease in credit card debt over the past few years. One of the main reasons consumers have been able to pay down their debts is through relief programs after the pandemic.

2. Student debt  

One in seven Americans (13.5%) has student loan debt. This figure includes both federal and private loans. The age group of 25 to 34 is the most likely to have student loan debt, but the greatest amount is owed by those 35 to 49, those who continue to pursue higher education.

Among all graduates, the average student loan debt is around $28,950. The figures cited do not reflect the large-scale student debt cancellation announced on August 24. The White House anticipates reducing the balances of as many as 20 million borrowers and the balances of the rest by as much as $20,000.

3. Personal loans 

In 2022, the number of personal loan accounts has increased by 16%. This is likely due to the popularity of personal loans. Debt consolidation is receiving renewed interest as high credit card APR rates make it difficult to pay off debts. The current personal loan debt is 25.1 million in the U.S.

4. Mortgage loans 

Regarding how much debt the average American has, mortgages represent the largest outstanding debt in America. Mortgage debt is currently worth around $220,380 on average. The average mortgage balance increased by 5.9 percent in the past year due in part to increasing real estate prices. 

Banks’ interest rates for loans have been going up throughout the year, which has started negatively impacting the housing market. In some areas, prices have already begun to decline. These changes may affect mortgage debt over the next year.

5. Automobile debt 

Most Americans finance a vehicle purchase by taking out a loan and paying down the balance over time. Auto loans are popular types of credit, with two-thirds of U.S. adults having at least one. The average car loan debt in America is $20,987, an increase of 6.7% from 2020. 

Getting out of average American debt 

The average American’s debt is constantly increasing, so it’s important to stay on top of your debt situation, no matter how small the balance may seem. So here are a few steps to get out of debt sooner:

  • List all your debts, balances, due dates, interest rates, minimum monthly payments, and contact information. 
  • Review your spending plan. Write down how much you earn each month and how much you spend on bills, such as rent, utilities, groceries, and minimum debt payments. 
  • Make room in your budget for debt payments. To find out how much money you have left over each month, subtract your bills from your income. Each month, put this much money towards debt repayment.
  • Discuss the debts in order of importance. Financial experts usually recommend using one of two methods to save money: snowball or avalanche.

While we’re all in the same boat, it’s better to make efforts and take one step at a time to get out of debt completely. We hope you don’t feel alone and are better prepared to take on your debt repayment plan!

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