While average personal debt has dropped since 2019, a third of Americans say they're carrying the highest debt ever

Money.com dives into a 2023 Northwestern Mutual and the Harris Poll survey, along with Federal Reserve Data, to uncover how much debt the average American has.

Mary Ellen Cagnassola
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Americans have less personal debt than they did before the pandemic, according to data analyzed by Money.com 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 arespondents 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.

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% 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 that 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%)

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, which can help improve one's credit in instances.

Even though the report suggests Americans are reducing their debt overall, that doesn't mean everyone's circumstances 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.

This story was produced by Money and reviewed and distributed by Stacker Media.