How much money does the average American owe? According to a 2020 Experian study, the average American carries $92,727 in consumer debt. Consumer debt includes a variety of personal credit accounts, such as credit cards, auto loans, mortgages, personal loans, and student loans.
The average American has $90,460 in debt, according to a 2021 CNBC report. That included all types of consumer debt products, from credit cards to personal loans, mortgages and student debt. The average amount of debt by generation in 2020: Gen Z (ages 18 to 23): $16,043.
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.
On average, Americans carry $6,194 in credit card debt, according to the 2019 Experian Consumer Credit Review. And Alaskans have the highest credit card balance, on average $8,026.
And yet, over half of Americans surveyed (53%) say that debt reduction is a top priority—while nearly a quarter (23%) say they have no debt. And that percentage may rise.
“Shark Tank” investor Kevin O'Leary has said the ideal age to be debt-free is 45, especially if you want to retire by age 60. Being debt-free — including paying off your mortgage — by your mid-40s puts you on the early path toward success, O'Leary argued.
In August 2021, about 64 million people with a credit record (about 28 percent of Americans) had debt in collections on their credit report, down from 68 million in 2019.
In general, you never want your minimum credit card payments to exceed 10 percent of your net income. Net income is the amount of income you take home after taxes and other deductions. You use the net income for this ratio because that's the amount of income you have available to spend on bills and other expenses.
So how much non-mortgage debt do Americans have? According to Northwestern Mutual's 2021 Planning & Progress Study, U.S. adults aged 18 and over who carry debt hold an average of $23,325 outside of their mortgages.
“Good” debt is defined as money owed for things that can help build wealth or increase income over time, such as student loans, mortgages or a business loan. “Bad” debt refers to things like credit cards or other consumer debt that do little to improve your financial outcome. These are oversimplifications.
Many people would likely say $30,000 is a considerable amount of money. Paying off that much debt may feel overwhelming, but it is possible. With careful planning and calculated actions, you can slowly work toward paying off your debt.
Here's the average debt balances by age group: Gen Z (ages 18 to 23): $9,593. Millennials (ages 24 to 39): $78,396. Gen X (ages 40 to 55): $135,841.
However, far from debt being out of the ordinary, it may be a normal part of everyday life. In fact, studies suggest it's actually normal to owe large amounts of debt.
And according to data from the 2019 Survey of Consumer Finances by the US Federal Reserve, the most recent year for which they polled participants, Americans have a weighted average savings account balance of $41,600 which includes checking, savings, money market and prepaid debit cards, while the median was only ...
Credit Card Debt Trends
In Q4 2021, the average credit cardholder in the U.S. had $5,934 in credit card debt in Q4 2021 — about 0.6% less than Q4 2020's $5,968 average. During this same period, Americans opened 26 million more credit card accounts.
The average debt for individual consumers dropped from $6,194 in 2019 to $5,315 in 2020. In fact, the average balance declined in every state.
Consumers of all ages carry credit cards, but some generations have larger outstanding balances than others. Members of Generation X have the highest average credit card debt at $7,155, followed by baby boomers and millennials, according to credit bureau Experian's latest consumer findings.
Key findings
Just 13% of millennial credit cardholders are debt-free, slightly higher than the 11% of Gen Xers who said the same, but far less than the 29% of baby boomers without any debt. 67% of millennials report having credit card debt, while just 36% face student loan debt.
The average American's net worth: $121,760
The median net worth of Americans in 2019 was $121,760, according to the Federal Reserve. That's a $30,000 increase since 2010 but still below the median wealth recorded in 2007, 2004, and 2001 -- all before the 2008 recession. Data source: Federal Reserve (2020).
Yes. An Experian study found that as of 2019, 1.2% of all credit-holding Americans had a FICO score of 850. A perfect score generally requires years of exemplary financial behavior, like making on-time payments, keeping a low credit utilization ratio, and maintaining a long history of credit accounts.
INCREASED SECURITY. When you have no debt, your credit score and other indicators of financial health, such as debt-to-income ratio (DTI), tend to be very good. This can lead to a higher credit score and be useful in other ways.
Is being debt-free the new rich? Yes, as long as you have money and assets, in addition to no debts. Living loan-free is a fantastic way to stay financially secure, and it is possible for anyone. While there are a couple of downsides to being debt-free, they are minimal.
Being debt-free is a financial milestone we often hear about people striving for. Without debt, you can focus on building more savings, investing those extra funds and just simply having more peace of mind about your finances.