DEBT STUDY:

How the Pandemic Changed Average Household Debt in the US

The COVID-19 pandemic changed nearly every facet of American life — including debt. MoneyGeek’s analysis looked at how this unprecedented paradigm shift has impacted household debt in the United States.

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Americans added $660 billion of debt since the start of the pandemic — they also paid down credit card debt, bought homes and — according to MoneyGeek’s recent financial stress survey — largely felt optimistic about their financial futures.

MoneyGeek analyzed data from the New York Federal Reserve’s Household Credit and Debt Report as well as the most recent Survey of Consumer Finances to explore the complex ways COVID-19 has affected consumer debt.

Key Findings:
  • The average U.S. household has more than $155,000 of debt, amounting to nearly $54,000 per person.
  • Americans took on $660 billion of new debt since the beginning of the pandemic — an increase of 3.3% in average household debt.
  • At the same time, Americans paid off $110 billion in credit card debt.
  • The top 1% and bottom 50% of earners hold the most non-mortgage-related consumer debt per household.

Americans Added Consumer Debt While Paying Down Credit Card Debt

The average American accumulated $1,700 in additional consumer debt during the pandemic. Also known as personal debt, consumer debt is debt available to everyday people and includes mortgage, credit card, student loan and auto loan debt.

This uptick in consumer debt was primarily caused by increased mortgage debt mortgages as home-buying took off during the pandemic.

Interestingly, this increase in mortgage debt was offset by lower credit card debt. Thirty-six percent of respondents to MoneyGeek’s recent financial stress survey reported paying down their credit card balances over the previous six months. In total, Americans paid down $110 billion in credit card debt since the first quarter of 2020, an average of $2,049 per household.

Average Consumer Debt Per Capita

The average American holds $53,897 in personal debt. Much of this is tied up in mortgages — with these excluded, the average per capita debt in 2021 was $16,720.

Student loans and car loans make up the bulk of the non-mortgage personal debt — the average individual has more than $5,000 of debt in each category.

Compared to the last pre-pandemic quarter (Q1 2020), mortgages have increased by more than 6% overall, car loans by nearly 4% and student loan debt by 1% as of Q2 2021. Meanwhile, credit card debt and home equity revolving credit dropped by double-digit percentages.

Average Debt Per Capita
Type of Debt
Q2-21
Q1-20
% Change
$ Change

Mortgage

$37,627

$35,459

6.10%

$2,169

Student Loan

$5,657

$5,604

1.00%

$54

Auto Loan

$5,099

$4,914

3.80%

$185

Credit Card

$2,836

$3,260

-13.00%

-$424

Home Equity Revolving

$1,160

$1,409

-17.70%

-$249

Other

$1,517

$1,559

-2.70%

-$42

Weighted Average Per Person

$53,897

$52,204

3.20%

$1,693

Average Household Debt

The average household debt reached $155,038 in 2021, up 3.3% from the first quarter of 2020 — the last pre-pandemic quarter.

Nearly all (77%) American households hold some form of debt. Credit cards are the most common type of debt, followed by mortgage debt and car loans. Nearly half (45%) of households have credit card debt, 40% have mortgage debt and 37% have car loans. It’s no wonder that 35% of respondents to MoneyGeek’s financial stress survey reported being stressed out by their credit card debt.

Average Household Debt Balances by Type of Debt
Type of Debt
Q2-21 Debt Balances
% Households with Debt

Mortgage

$207,275

40.00%

Student Loan

58,252

21.40%

Auto Loan

30,448

36.90%

Credit Card

13,764

45.40%

Home Equity Revolving

56,816

4.50%

Weighted Average Per Household Debt*

$155,038

76.60%

*Since not every household has each type of debt, debt balances can vary dramatically by family. For example, among the 40% of households with mortgage debt, the average household mortgage balance was $207,275. Because households with mortgages are in the minority and tend to be higher than all other types of debt, the average weighted household debt is lower than the average mortgage balance.

Car and Student Loans Doubled Since the End of the Great Recession

Not all types of debt are created equal. Student loans — the subject of hot political debate and source of financial strain for millions of Americans — and car loans have doubled since 2010.

By 2021, total student loan debt reached more than $58,000 per household, and the average American household had more than $30,000 in car loans. There’s over $1.5 trillion and $1.4 trillion owed on student and auto loans, respectively.

Younger generations may bear the brunt of this student loan debt — for many, this type of debt is a significant source of stress. MoneyGeek’s financial stress survey found that Gen Z and millennial adults were most likely to report student loans as the aspect of their finances that caused them the most stress.

Top 1% & Bottom 50% Hold the Most Consumer Debt Per Capita

The top 1% and bottom 50% households in net worth have something in common: They hold the most consumer debt — not counting mortgage debt. The average debt among the bottom 50% of households doubled since 2003, growing more rapidly than other groups.

Excluding mortgages, the top 1% averaged just over $50,000 in debt while the bottom 50% had almost $37,000. Households in the top 10% but below the top 1% had the lowest level of debt at just over $23,000.

Expert Spotlight: How COVID-19 Has Impacted Debt & Financial Attitudes

MoneyGeek consulted consumer finance experts to get their perspectives on how the COVID-19 pandemic affected consumer debt trends and how they envision those trends evolving.

How do you anticipate U.S. household debt to change as we grapple with the rocky emergence from the pandemic?

Michael Bovee:

I expect there to be an increase in people unable to keep current with their credit card bills. I expected higher credit card defaults once the pandemic hit, but the stimulus payments, increased unemployment and payment forbearance from credit card lenders prevented that. When mortgage payment forbearance ends for families still living on the financial edge — as it is ending for many households right now — money that was used to stay afloat and to pay credit card bills will shift back to the roof overhead. If people are not back to work and able to keep all their financial plates in the air, credit card defaults will likely increase as a result of housing costs again becoming the priority. I hope to see increased financial preparedness and awareness for a long time to come. I hope another trend I am seeing, where people now talk to their family, friends and circle of influence about financial setbacks more, continues as well. This topic alone is worth further discussion.

Lisa Fischer:

While credit card debt declined throughout the pandemic because of stimulus checks and enhanced unemployment benefits, it is back on the rise as these payments begin to level off. According to New York Federal Reserve data published last Tuesday, in the second quarter of 2021, credit-card debt increased by $17 billion. At the same time, consumers may be spending more as travel, shopping, and restaurants open back up, which may all contribute to rising household debt.

As we continue emerging from the pandemic (regardless of uncertainty around the delta variant), consumers should work to continue borrowing responsibly as spending may tick up. There’s nothing wrong with spending on credit, but work to do so in a way that will maintain and improve your credit health. For example, if you are financially able to, try to pay your bills in full and on time each month and avoid spending beyond your means. As we emerge from the pandemic and spending habits change or normalize, it can also be a good opportunity for consumers to evaluate finances and spending across the board. Take a look at your recent statements, see where you’re spending the most and where you might need to cut back. Also, look at the cards you are using – are they charging hidden fees or do they have confusing terms? If so, it may be time for a change.

Renaud Laplanche:

We believe the evolution of U.S. household debt will be driven by the evolution of the pandemic. If the Delta variant continues to cause surges in new COVID cases, we might see the recovery — and therefore demand for credit — slow back down again. After shooting up to over 30% when stimulus checks first got distributed, the U.S. personal saving rate is back down to single digits, which is another factor driving credit demand back up.

Methodology

To calculate the average per capita debt overall and for each debt type, we utilized data from the New York Federal Reserve’s Household Credit and Debt Report for Q1 2021. We calculated per capita debt levels using data for members of the U.S. population with a credit report.

We utilized data from the New York Federal Reserve’s Household Credit and Debt Report for Q1 2021 and data on the total number of households in America to calculate the average debt per household. To calculate the average household debt for each type of debt, MoneyGeek used the proportion of households with that type of debt based on the 2019 Survey of Consumer Finances by the Federal Reserve Board and the U.S. Department of the Treasury.

About the Author


expert-profile

Deb Gordon is author of The Health Care Consumer’s Manifesto (Praeger 2020), a book about shopping for health care, based on consumer research she conducted as a senior fellow in the Harvard Kennedy School’s Mossavar-Rahmani Center for Business and Government between 2017 and 2019. Her research and writing have been published in JAMA Network Open, the Harvard Business Review blog, USA Today, RealClear Politics, TheHill, and Managed Care Magazine. Deb previously held health care executive roles in health insurance and health care technology services. Deb is an Aspen Institute Health Innovators Fellow, and an Eisenhower Fellow, for which she traveled to Australia, New Zealand, and Singapore to explore the role of consumers in high-performing health systems. She was a 2011 Boston Business Journal 40-under-40 honoree, and a volunteer in MIT’s Delta V start-up accelerator, the Fierce Healthcare Innovation Awards, and in various mentorship programs. She earned a BA in bioethics from Brown University, and an MBA with distinction from Harvard Business School.


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