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Average American Debt

A recent report shares that 77% of American households have at least some type of debt.1 And the total personal debt of all U.S. households is $14.56 trillion (as of the end of 2020) across about 120 million households.2,3

You might be wondering where you stand in comparison to average American debt, or you’re curious about the financial status of our country. Either way, the numbers and research we’ve gathered here from multiple sources will reveal and clarify the present state of debt in American households.

Debt Definition and Types of Debt

Before we go any further, let’s define debt. Plain and simple, debt is owing any money to anybody for any reason. If you have debt, you’ve most likely agreed on terms of repayment, and those terms mean specific payments at specific time periods until the debt is paid off—typically with interest (the extra cost the lender charges you for borrowing their money).

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Some of the most common types of debt in America include credit cards, student loans, auto loans, home equity lines of credit (HELOCs), and mortgages. Though each impacts Americans of all ages, some age groups are more impacted than others—so we’ll look at not only American totals and averages, but also at debt across various age groups.

Average American Debt at a Glance

To start, let’s look at the overall totals for American debt and the average debt per household in five categories.

Average American Debt Per Household

Total American Debt 2020 Q4

Credit Card Debt

Eight out of ten adults in America have at least one credit card, and 45% of American households carry a balance (meaning they don’t pay their credit cards down to zero each month, so they have credit card debt).4,5,6 That’s just over 55 million households with this kind of debt.7,8 The average credit card debt per household with this type of debt is $14,821—with the total in America hitting $819 billion.9,10

The average APR (annual percentage rate, or interest rate) on credit cards is 16.28.11 And those 55 million households who have credit card balances pay that average interest. Think of it like this: If you multiply 16.28% by the $819 billion Americans owe, that’s about a $133 billion profit for credit card companies on interest alone.

You may hear credit card holders say they don’t carry a balance, but more than half of them do. The Federal Reserve shares that only 48% of Americans with credit cards pay their bill in full every month.12 The other 52% are carrying debt and adding to those interest fees and that $819 billion statistic.

Credit Card Total Debt By Age

Student Loan Debt

The total student loan debt in America is currently at $1.56 trillion, with each borrower owing an average of $35,359.13,14 The fastest-growing debt in America (increasing in growth at almost 157% since the Great Recession), student loans make up 11% of the country’s debt total.15 That’s the second largest percent, just after mortgages.16

Student loan debt for Americans age 18–29 is at $358 billion and makes up 33% of their total debt. And though student loans account for only 2% of debt for Americans age 70+, they collectively owe $21 billion.17,18,19 (Yes, some 70-year-olds are still paying for college. Let that sink in.)

Young adults say the weight of student loans keeps them from basic financial and life decisions. For example, 40% delay investing in retirement, and 47% put off buying a home. And 21% even wait to get married because of their student loan debt.20

Student Loan Total Debt By Age

Auto Loan Debt

Total American auto loan debt is $1.37 trillion.21,22,23 Thirty seven percent of households in the United States (that’s about 45.4 million households) have this kind of debt, with an average of $30,240 per household.24,25,26

So, how much are these people paying each month? Well, the average monthly car payment is $554 for new vehicles and $391 for used.27

HELOC Debt

A HELOC (home equity line of credit) is a loan that allows you to borrow cash against the current value of your home, using the equity you’ve built up in your home as collateral. In other words, you’re giving up the equity you’ve earned and trading it in for more debt.

There are over 4.7 million HELOCs (totaling $349 billion) in the United States, with the average American household with this type of debt owing $73,685.28,29

Older Americans have the highest percentage of HELOC debt. HELOCs take up less than 1% of the debt held by those age 18–29, and 1% of the debt held by those ages 30–39, but that percentage rises to 6% for those 70+.30,31,32 

Mortgage Debt

For most people, housing is their biggest monthly expense. That means they pay a larger percentage of their monthly income to rent or mortgage than any other budget category (think of categories like utilities, groceries, insurance, etc.).

Americans with a mortgage pay a median monthly payment of $1,595.33 Accounting for 69% of all American debt, mortgage debt carries the highest total at $10.04 trillion.34 Forty-two percent of households have mortgages. (That’s about 51.5 million total American households).35, 36 And the average mortgage debt in our country is $194,718.37,38,39

Average American Debt by Age

So, we’ve broken out some of the average American debt totals by age already, but here’s an overview of debt totals and averages by age. Note: These averages include all American adults, both those with and without debt.

First, here’s an overview of consumer (or nonmortgage) debt by age.

Average Non-mortgage Debt Per Person By Age

Now we’ll look at each age group’s total debt broken into percentage by debt type. Notice younger Americans have a higher percentage of student loans, but older Americans have a higher percentage of mortgage debt.

 

Share of Total Debt By Type of Debt

For more information on debt levels across generations, check out our research study.

Did COVID-19 Impact the Average American Debt?

COVID-19 had, and continues to have, many effects on American finances. (That’s probably the understatement of the year.) Businesses have closed, and job loss has become far too common. If you haven’t been affected directly by these changes, you probably know someone who has.

Inside the roller coaster of change that was 2020, debt totals weren’t left untouched. And while the changes we’ll share aren’t necessarily because of the pandemic, they happened during the pandemic and are therefore interesting to see.

2020's Effect on Average American Debt Totals

You’ll notice the largest percentage increase through COVID was in mortgage debt, up 5.1%.40  Despite a real estate drop in May 2020 (often the hottest sales month in the industry), by the end of the year both home sales and home prices were rising above the trends of 2019.41,42 This unexpected real estate boom in the middle of a pandemic is considered quite the financial surprise.

On the other end, you’ll see credit card debt dropped 11.7%, from $927 billion at the end of 2019 to $819 billion at the end of 2020.43 Interesting, right? Why did this happen?

The Consumer Financial Protection Bureau asked this question as well. In their research, they suggest one cause of the drop in credit card balances during 2020 is simply that consumers were spending less. The Bureau looked for evidence to support another theory—that those with secure employment might be decreasing their credit card debt at a large enough rate to cover up the increase in debt of those in financial distress. The Bureau explains they couldn’t test that idea directly. But in an indirect test, they saw “the decrease in average credit card balance holds for all groups” in their data.44  In other words, credit card debt during COVID-19 appears so far to be dropping all over—no matter the consumer’s employment status.

What to Do if You’re in Debt

If you’re in debt, these numbers show you’re not alone. Still—if you’re part of these statistics, you don’t have to stay there. You don’t have to continue throwing $554 each month into an auto loan (for a car that loses 60% of its total value over the first five years of its life).45  You don’t have to continue carrying student loan debt into what should be your restful retirement years.

Listen, your income is your greatest wealth-building tool. But when you have debt, you can’t build wealth because you’re spending part of this month’s income to pay for something last month, last year or even last decade.

When you get out of debt and finally take back your income—all of it—you can move forward with your finances. And paying off whatever amount of debt you have probably won’t take nearly as long as you think it will.

Here’s how you get debt out of your life once and for all:

1. List out all your debts.

It might not be pretty, but it’s got to be done! People sometimes get so scared of this first step that they stop right here. Don’t. You can do this.

Our own Ramsey Solutions research found that nearly half (46%) of Americans say their debt level creates stress and makes them anxious. Yes, facing your debt might be difficult, but when you finally face the facts, you can follow a plan to attack it head on. You’re on the path away from money stress. So, keep walking.

2. Save a starter emergency fund.

Before you attack your debt, make sure you’ve got $1,000 saved as a starter emergency fund. Why? As you’re paying off debt, life will happen—we’re talking about the flat tire, leaking refrigerator and unexpected medical bill. If you don’t have money saved up to pay cash for emergencies, you’ll be tempted to pull out a credit card—and go deeper in debt.

3. Pay off your debt with the debt snowball method.

Next, pay off all nonmortgage debt from smallest to largest with the debt snowball method. Don’t argue with our math here and ask about interest rates. The point of the debt snowball method is momentum and motivation. You pay the minimum payment on all debts except the smallest—that’s the one you go after hard. When it’s out of the way, you put all the money you were throwing at it to the next-smallest debt. Repeat until you’re debt-free. You’ll get quick wins all along the way. And with those quick wins will keep you moving.

Use our debt snowball calculator to see how it’s done.

4. Get the help you need along the way.

Say it again: You’re not in this alone. And guess what? You don’t have to figure everything out on your own either. Get some help!

Find a product like Ramsey+. This membership offers a call with a trained financial coach, online money management courses that teach you the plan to get out—and stay out—of debt, and tools like EveryDollar that help you budget your way to freedom from debt. Listen: This actually works. The average debt paid off in the first 90 days of working this plan is $5,300. (You can try this membership in a Ramsey+ free trial, by the way.)

Getting the help you need makes the debt-free journey quicker and easier. That’s a true win-win.

5. Don’t give up.

Some days paying off your debt will be harder than others. But don’t give up. It will be so worth it. 

Here’s the deal: Debt is common—but it’s holding you back from living your financial dreams, both today and far into the future. You’re worth this investment of time and energy to break away from debt. We said it before, and we’ll say it again—because we believe it 100%: You can do this!

Start today. Try Ramsey+ and begin your debt-free journey.

 

About the Stats

At times we used multiple sources for data on debt in average U.S. households, percentages of U.S. households with certain types of debt, and differences in these debt totals and types across age categories. In these cases, we interpreted data from across these sources to provide our best approximation of average debt. There are limitations to working across multiple sources, and we attempted to account for these limitations when possible. Still, variations from source to source could affect the precision of our results.

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.

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