The United States is grappling with a debt crisis fueled by rising prices, soaring interest rates, and aggressive marketing by lenders. These consumer debt statistics break the problem down and help us understand it better.
Key Findings
- Total consumer debt in the U.S. increased 1.3% from the second quarter of 2023 to $17.29 trillion in the third quarter of 2023.
- Mortgage debt is the largest type of consumer debt, with a balance of $12.14 trillion.
- Credit card debt is the second largest type of consumer debt, with a balance of $1.08 trillion.
- Student loan debt is the third largest type of consumer debt, with a balance of $1.6 trillion.
- Auto loan debt is the fourth largest type of consumer debt, with a balance of $1.6 trillion.
- Certain demographic groups, such as older adults, men, and white households, tend to have higher levels of debt.
Total Consumer Debt
Total US household debt rose by 1.3% to reach $17.29 trillion in the third quarter of 2023, according to the latest Quarterly Report on Household Debt and Credit[1].
What Are the Primary Types of Consumer Debt in the US?
Consumer debt encompasses personal debts incurred from purchasing goods or services primarily for personal or household consumption. This includes credit card debt, student loans, auto loans, mortgages, and payday loans.
What Is the Amount of Debt for Each Type?
According to an analysis by the Federal Reserve Bank of New York, total consumer debt in the United States increased by 1.3% to $17.29 trillion in the third quarter of 2023, primarily driven by growth in mortgage, credit card, auto loan, and student loan balances[1].
- Mortgage balances reached $12.14 trillion, a 2.4% increase from the previous quarter.
- Credit card balances climbed to $1.08 trillion, a 4.6% rise.
- Student loan debt hit $1.6 trillion, a 0.6% increase.
- Auto loan balances continued their upward trend, reaching $1.6 trillion in Q3.
Other balances, including retail cards and consumer loans, remained relatively stable at $0.53 trillion.
Debt Amounts vs Debt Stress
Different groups of people owe very different amounts of debt. Before we look at who owes what, we have to look at the important distinction between debt level and debt stress.
People with higher incomes consistently have more debt and less debt stress than those with lower incomes, while people with lower incomes typically have less debt and more debt stress. There are several reasons for this.
Higher Income Households Qualify for More Debt
People with higher incomes owe more because they are permitted to borrow more. Lenders handling large loans like mortgages and car loans focus on the debt-to-income ratio. They are more willing to make large loans to people who have enough income to pay them back.
High-Income Households Borrow at Lower Interest Rates
The interest rates that borrowers pay on their debts are heavily influenced by credit scores. High-income households typically have higher credit scores that qualify for the best possible terms on many forms of credit[2].
High-income individuals tend to have a larger percentage of their debt in their mortgage, the lowest-interest form of debt. Lower-income individuals are more likely to carry higher-interest debt types like credit card debt or even payday loan debt.
High-Income Households Spend Less of Their Income on Debt
Low-income households typically spend 75% of their income on core needs like housing, food, and transportation[3]. Housing alone takes up an average of 41% of a typical low-income household’s income[4]. This leaves far less income available for debt service.
This means that while higher-income households carry more debt, they spend less of their income servicing that debt, causing lower levels of debt stress.
The top 1% of US earners make a median of $570,003 per year. The closer to this level a household gets, the lower the percentage of their income that goes to debt payments[5].
We noted earlier that low-income families typically spend 75% of their income on core needs. With debt payments at 26.11% of income, debt stress is inevitable as expenditures exceed income.
As we look at groups that hold the largest amount of debt, we have to recall that high debt levels tend to be a sign of economic privilege, not economic hardship. Average interest rates and percentage of income spent on debt payments are better indicators of debt stress than the total level of debt owed.
Consumer Debt Demographics
Consumer debt varies significantly across different age groups, genders, and ethnicities.
Consumer Debt by Age
According to a 2023 report by the Federal Reserve Bank of New York, consumer debt generally increases with age, peaking in the 40-59 age group and then declining slightly in the later years[5].
Younger Americans have relatively low levels of debt, but high levels of debt stress. This is evidenced by the high rates of serious delinquency for younger holders of credit cards and car loans[6].
Consumer Debt by Ethnicity
American households of all ethnic backgrounds carry debt. Black and Native American households are likely to owe more relative to their household assets and to carry higher-interest debt[7].
Black and Hispanic households carry higher levels of credit card debt than white households.
Black and Hispanic households tend to have lower levels of credit card debt than white households. They also typically have lower incomes, which leaves fewer resources available to pay these debts.
💳 Read more: Master your finances with our guide on how to use credit cards wisely, featuring 11 essential rules to follow.
Black, Hispanic, and Native American individuals tend to have lower credit scores than white individuals, suggesting that they also pay higher interest rates on both credit card debt and installment loans.
🤔 Learn more: Understand the different types of interest rates and how they affect your borrowing, saving, and investing decisions.
Homeownership rates are higher among white consumers (74.4%) than among the Hispanic (48.6%) or Black (45%) populations. This suggests that white households are more likely to be carrying low-interest mortgage debt as part of their debt load.
👉 Learn more: Our post offers essential advice on securing a mortgage when self-employed, ensuring you’re prepared for every step.
The median mortgage amount is $130,000 for white and Hispanic borrowers and $116,000 for Black borrowers. However, focusing solely on the median amount masks a deeper issue: Black, Hispanic, and Native American homeowners often face higher-cost and riskier mortgages compared to white borrowers[5].
Consumer Debt by Family Structure
A study conducted by credit reporting agency Experian revealed that U.S. consumers with children carry 14% to 51% more total debt than the national average[9].
Debt balances for credit cards and personal loans increased significantly with the number of children. Student loan balances remained relatively constant, suggesting that most individuals have completed their education and student loan payments by the time they start having children.
The average credit scores of parents fall slightly below the national average, suggesting that families are paying average or above-average interest rates.
👉 Learn more: Unveil the most effective credit building tools in our latest guide, designed to help you establish strong credit in 2024.
Consumer Debt by State
Debt levels vary significantly from state to state. California is the most indebted state with the average resident carrying $84,050 in debt.
| State | Total Debt per Capita |
|---|---|
| AZ | $70,350 |
| CA | $84,050 |
| FL | $58,610 |
| IL | $53,730 |
| MI | $46,680 |
| NJ | $64,820 |
| NV | $69,290 |
| NY | $57,560 |
| OH | $44,610 |
| PA | $48,030 |
| TX | $56,610 |
There are several notable trends and reasons behind the geographical variations of consumer debt in the US.
Regional Variations in Income Distribution
According to the U.S. Census Bureau, the median household income in the United States in 2021 was $70,784. This figure remained relatively stable compared to the 2020 median household income of $71,186[9].
Median incomes varied across the four major regions of the United States. The West and Northeast regions had the highest median household incomes in 2021, with $79,430 and $77,472, respectively. The Midwest followed with $71,129, and the South had the lowest median household income at $63,368[9].
The difference in median household incomes between the Northeast and the West in 2021 was not statistically significant. This indicates that the income levels in these two regions were relatively similar. Additionally, none of the four regions experienced a statistically significant change in median household income between 2020 and 2021[9].
The variations in median household income across regions reflect underlying economic and demographic factors. Factors such as educational attainment, employment opportunities, and industrial composition can contribute to income disparities. Understanding these regional differences is crucial for policymakers in addressing economic inequality and promoting inclusive growth.
Cost of Living and Job Market Stability
Hawaii for example claimed the top spot as the most expensive state in terms of cost of living[10]. This high cost of living is contributing to high levels of consumer debt.
While New York had the fifth-highest cost of living nationwide, its residents held the most disposable income.
States with more stable job markets and lower unemployment rates, such as those in the Midwest and Plains regions, tend to have lower levels of consumer debt.
Credit Card Debt Statistics
Credit card balances are on the rise, driven by inflation and increased spending. Total outstanding balances crossed the $1 trillion mark, a record high, in late 2023.
Credit card interest rates have also spiked dramatically, and the combination of larger balances and higher interest rates has generated significant increases in credit card debt payments.
Rising balances and interest rates have pushed credit card delinquency rates up, especially among younger credit card holders.
💳 Learn more: Break free from credit card dependency with our guide on how to stop using credit cards in just 6 steps.
Mortgage Debt Statistics
Mortgage debt has been increasing steadily over the past decade, driven by a strong housing market, increasing home prices, and the low interest rates that prevailed until March 2022, when the current round of rate hikes began[1]. The increase in mortgage balances accounts for a large portion of the total increase in consumer debt.
The average mortgage interest rate has also been increased, reflecting the prevailing high-rate environment. Rates are currently at their highest point since 2000[11].
Rising interest rates have been matched by a continuing increase in average home prices. Higher rates did drive a slight reduction in the average sale price in late 2023, but home prices persist at historically elevated prices[12].
The simultaneous rise in prices and interest rates has pushed the average mortgage payment to record highs.
Despite rising payments, delinquency rates for all types of mortgages are near record lows, indicating that Americans are prioritizing mortgage payments over other forms of debt and other expenses.
Auto Loan Statistics
The total balance of US auto loans has expanded rapidly, from 0.75 trillion in the second quarter of 2012 to a record high of $1.6 trillion in Q3 2023[1].
The steep rise in loan balances is driven largely by the rapid increase in the prices of new vehicles, driven by supply constraints in the pandemic and post-pandemic periods[13].
As with most other loans, auto loan interest rates have increased dramatically since 2007[14].
Average monthly auto payments have also risen to new highs. The average car payment for new vehicles rose 16.23% from 2022 to 2023, reaching $726[15].
🚗 Learn more: Find out what car loan interest rates you can expect based on your credit score in our comprehensive guide.
Auto loan delinquencies have spiked since 2021, especially for younger borrowers[1]. They remain below the peak reached in the 2008 “Great Recession”.
Student Loan Debt Statistics
Total US student loan debt stands at $1.766 trillion. That balance has been increasing steadily for years.
Rising student debt is driven by college tuition, which has been increasing steadily for years. Tuition has grown by an average of 2% annually over the last decade[16].
👩🎓 Learn more: Dive into our guide on what to consider before taking out a student loan, ensuring you make informed decisions about your education financing.
Federal loans account for a substantial 93.1% of all student loan debt, amounting to an outstanding balance of $1.645 trillion. Approximately 43.6 million borrowers hold federal student loan debt.
The average federal student loan debt balance is around $37,718. When considering private loan debt as well, the total average balance may reach as high as $40,499.
Despite the significant debt burden, student loan default rates remain relatively low, with less than 1% of loans entering default as of 2022’s fourth financial quarter (2022 Q4).
Federal student loan default rates have been at zero since payments were paused at the start of the COVID-19 pandemic. Payments have now resumed, but no accounts will be declared in default during a one-year “on-ramp” period designed to ease borrowers back into loan payments.
👩🎓 Learn more: Unravel the benefits and process of student loan refinancing to see if it’s the right financial move for you.
Medical Debt Statistics
Medical debt has emerged as a major problem for many Americans, with medical debt now totaling at least $195 billion[17]. Unlike many other forms of debt, medical debt is rarely a choice: nobody decides to get sick or injured.
The rise in Medical debt has been driven by three primary factors.
- The US has the world’s most expensive healthcare by a wide margin[18].
- Many Americans are insured through their employers, and employers have cut costs by raising deductibles and out-of-pocket spending[19].
- Almost two thirds of American workers live paycheck to paycheck and do not have significant savings[20].
High costs, high deductibles, and low or no savings leave many Americans with few options when medical costs hit unexpectedly, and even many people with health insurance carry medical debt.
🏥 Learn more: Dive into our analysis to understand the scale of healthcare spending in the US and what it means for you.
Medical Debt by the Numbers
Roughly 23 million Americans, or 9% of the adult population, owe $250 or more in medical debt[21].
Adults aged 35-65 and Black Americans hold the highest levels of medical debt.[22]
Medical debt drops after age 65 because workers become eligible for Medicare.
🏥 Learn more: Facing high medical costs? Our guide offers practical steps on how to negotiate a medical bill and reduce your expenses.
People with disabilities and those who report their health status as “poor” also carry higher levels of medical debt.
🏥 Learn more: Our guide offers 17 strategies for anyone seeking help paying medical bills, providing relief from overwhelming healthcare expenses.
Residents of the southern states, rural residents, and states that have not opted for expanded Medicaid carry more medical debt.
🏥 Learn more: Explore the pros and cons of deciding to consolidate medical debt and whether it’s the right move for your financial health.
42% of American adults with medical debt owe between $1000 and $5000. 26% owe over $5000.
Only 1% of American adults, or 3 million people, owe more than $10,000 in medical debt. This small group accounts for 71% of the total outstanding medical debt.
Can Americans Manage Their Debts?
Almost all forms of debt are increasing, and the resumption of federal student loan payments has placed an additional burden on budgets already strained by inflation. So are Americans managing those debt loads effectively?
Two metrics suggest that despite rising prices and increased debt loads, Americans are still keeping up.
First, while delinquencies are rising in certain categories, notably subprime auto loans, overall delinquency rates remain very low by historical standards[23].
Second, average American credit scores have increased steadily and now stand at record highs.
Low delinquencies and high credit scores suggest that debt in the US has not reached crisis levels. That will not comfort the people who are struggling to pay debts. Even if the nation as a whole does not have a debt crisis, many individuals do.
It’s impossible to predict whether delinquencies and credit scores will rise or fall. Tracking debt statistics still gives a better overall picture of what makes up America’s record level of consumer debt and what impacts it is having and could have in the future.
