Request a Call

American Debt Statistics

Search

American Debt Statistics

(Updated March 2021) 

When it comes to categorizing certain four letter words, it’s safe to say most people feel that debt is one of them. While there are those that argue that some debt is good, like mortgage debt, most Americans would rather have money to put somewhere else. They would much rather spend their hard earned dollars on fun stuff like vacations, or put money into savings & retirement rather than their debt. But in reality, if we want to have a house to live in or a car to drive, it is not surprising just how many people are in debt in the US. Unavoidable or not, going into debt is borrowing from our future, and many are feeling the sting of their past decisions today. In fact, about 13% of Americans expect to be in debt for the rest of their lives. Alas, debt is all too common in America.

Snapshot Statistics for Average american debt 2020

  • 80% of Americans have consumer debt
  • Americans have $14 Trillion in debt collectively
  • Mortgage debt is the biggest debt in America – with $9.44 trillion owed collectively
  • The average American household mortgage is $189,586
  • The average consumer debt is $38,000 excluding mortgages
  • People aged 45-54 have the greatest average debt when compared to other age groups, but they also earn the most money on average.
  • 13% of Americans expect to be in debt for the rest of their lives
  • Medical costs have increased 33% in the past 30 years, while income has only grown 30%
  • The cost of raising a child in America is around $250,000 from birth to age 18.
  • 2 out of 10 Americans use at least 50% of their income to pay back what they owe.
  • Only 1 in 3 Americans have a written budget
  • Almost half of the families in the US live paycheck to paycheck
  • 19% of Americans have $0 set aside for an emergency

Americans In Debt

What percentage of Americans are in debt?

Just how many Americans are in debt? According to financial experts, the percentage of Americans in debt is around 80%. 8 in 10 Americans have some form of consumer debt, and the average debt in America is $38,000 not including mortgage debt. Owing money just seems to be a way of life for Americans, as collectively we have $14 trillion in debt. That amount is climbing ever higher. Consumer debt can be broken up into 4 main categories: mortgage debt, auto loans, student loans, and credit card debt. Unpaid medical bills and expensive medical costs are quickly contributing to debt that Americans currently carry.

What is the biggest debt in America?

The biggest debt in America is mortgage debt with the average American household mortgage debt being $189,586 with the total of $9.44 trillion owed in the US. The next biggest debt is student loans, with the average amount per American household is $46,822. The average auto loan debt is $27,804 and the average credit card debt per household is $5135.

bar graph showing average debt per household by debt type

A study done on budgeting done by the Bureau of Labor Statistics reflects that mortgages & housing are our biggest expense. The most recent numbers from their study show that 33% of our monthly income is going toward housing – which includes mortgage repayment, utilities & bills, repairs & furnishings. However, the largest debt you have can vary by age group and stage of life. For example, people who are younger than 35 have, on average, about $67,400 of debt. The majority of their debt is made up of credit card debt and student loans. But as we look at age groups as they get old and consider their stage of life, it makes sense that mortgage debt would be the main source of debt for households 35-44, as many people buy houses and start families.

bar graph showing American debt per household by age group

The most common reasons Americans go into debt are medical costs, home improvements and having children. Indeed, there is a cost to having children. In fact, about 37% of couples are delaying having children and starting families until they get established financially & get most of their debt paid off. They fear the additional debt that having children could add – including loss of income from time off work and paying for daycare until the child reaches school age. The average costs associated with raising a child from birth to age 18 in America is $250,000, or $13,889/year, which include housing, food, & education. Adding children to the family also includes cost of medical care, which is increasing faster than our income is.

bar graph showing average total debt by ethnicity

Medical Care

Unpaid medical bills and the resulting accumulation of debt is a rising trend among Americans. Some Americans are paying for insurance AND their expenses out of pocket until their deductible is reached. This is even true with people with insurance, as some plans have very high deductibles. 62% of people who have trouble paying their medical bills report that they had health insurance at the time treatment started.

Medical bills can get incredibly expensive and add up quickly, especially if it is the result of an emergency or accident.   40% of Americans report they could not cover an unexpected expense of $400. And indeed, 15% of Americans are in medical debt of at least $10,000.

The rising cost of medical expenses is outpacing income growth. The analysis of the past 10 years has shown that medical costs have increased 33% while income has only increased 30%.  Though the powers-that-be are trying to change healthcare, many families are feeling the burden of unpaid medical debt. The average cost of medical care per person in America is $5000/year, which has doubled since 1984 (after adjusting for inflation).

Student debt

The cost of higher education is dramatically increasing as well. The median debt of students who either attend or graduate college with an undergraduate is $49,000. Forty million Americans have student loan debt, and 14% of those owe more than $50,000. The percentage of Americans with student loans who default is at least 28%. In our personal financial statistics article, we were able to see that if we look at income & ethnicity, Asians have higher incomes, on average, than any other races. The average income of Asians is $81,331 / year.. If we look at student debt, by ethnicity, we see that Asians are right in the middle when it comes to what they owe for their education.

bar graph showing student debt by gender

And while males tend to earn more money than females, females have more student debt on average than their male counterparts. Regardless of age, job type, industry, or seniority, men tend to earn $11,791 more than women on average.

bar graph showing student debt by gender

INCOME LEVEL

Currently, the amount of debt is positively correlated with the level of income. This means that the amount of debt rises as the amount of income rises. With more income,you can be approved for a higher mortgage or auto loan. You have greater ability to go into debt because you have greater ability to pay it back.

However, $11,200 is 7% of 160,000, while $3000 is 12% of $25,000. So while the dollar amount of debt is greater as income rises, the percentage of debt compared to their income decreases. Those with lower incomes feel the crunch much more than those with higher incomes.

bar graph showing average debt by income level

Income level is only one piece of the puzzle. Depending on where you live, your income might go really far or you might be strapped for cash due to the cost of living. There are some states where the average debt per capita  is higher than the average income. We’ve all heard that it’s expensive to live in California and Hawaii – and we can see that the average debt in Hawaii is $18,025 higher than the average income. The average debt in Hawaii is  $72,590 while the average income is $54,565.

Below are more examples of where the average debt exceeds the average income. On average, they owe more than they make.

bar graph showing the difference between per capita income and debt by state

DEBT BY REGION

The percentage of families in debt by US region are listed below. On average, only 75.4% of families are in debt in the northeast, as compared to 77.8% of families in the west.

bar graph showing percent of families in debt by region

The Costs of Being in Debt

Indeed, going into debt is borrowing from your future. Some debt can be considered “good.” Mortgages or student loans can be used to build your credit score and establish credit history. However, bills can pile up fast and then you can find yourself stuck in a cycle where the mountain gets ever higher and harder to climb.

Indeed, there are some people that are in so much debt they use at least half of their income to repay it. Indeed, 20% of Americans use at least 50% of their income to repay their debt. 

The more debt you owe will cause less available cash to pay for other things or save for an emergency. There’s a reason why it’s important to do your research and make a plan before you incur more debt. Will your college degree get you into a career that will worth what you paid for it? Will you be “house poor” after you buy a house you thought you could afford, only to realize too late that all the additional costs of owning a home leave you strapped for cash? Will the lack of cash prompt you to use a credit card or get a personal loan, going ever further into debt? Debt leaves us with less disposable income and more obligations.

It’s easy to get into the spend then borrow cycle. With almost half of Americans reporting they live paycheck to paycheck and 40% Americans reporting they wouldn’t be able to cover an unexpected $400 expense, we see that we need to take a good hard look at our finances and get them back on track.

Budgeting

Where’s our money going?

We can’t talk about debt without talking about budgeting. As we see the amount of money we owe grow and grow, we must ask ourselves – where is our money going? Most Americans couldn’t really answer that question – only about 1 in 3 people keep a household budget. What’s more alarming is that almost half of US families report living paycheck to paycheck. Sadly, 19% of Americans also report that they have $0 set aside to cover an unexpected financial emergency.

There are several factors to consider when looking at your personal budget. The first step is to see where the money is going. According to a survey done by Northwestern Mutual, almost 40% of our income is spent on discretionary spending. Our spending habits indicate that almost half our money on things such as dining out, nightlife, entertainment & hobbies. While there is nothing inherently wrong with spending money on these things, we are treading dangerous waters when we continue to live beyond our means and spend money we don’t have.

CONCLUSION

The problems with debt in the US will only continue to rise as more people are spending beyond their means. While some debt might be unavoidable, there really is no reason to keep up with the Joneses.

You can be free from the burden of debt, just start with a simple written budget. Look at your bank accounts, add it all up and actually see where your money is going. Really look at the reality of your situation, and don’t be afraid to make changes.

If you’ve never learned how to budget, it’s time to start now. You can regain control of your finances. Ask around, find resources at your local library or church, or even search YouTube for budgeting ideas. There are tons of ideas out there on how to manage your money.

Stop reaching for the credit card. Start budgeting, build up an emergency fund, pay back debt (and don’t incur more of it!) and save for non-regular expenses. Start saving money – cook at home instead of eating out, shop second hand, take a stay-cation

 Don’t become a statistic and get stuck in the spend and borrow cycle. It will take hard work. It will take sacrifice. But your future self will thank you when you’re finally debt free.

American debt statistics

downloads and resources

Data Resources

  • northwesternmutual.com
  • marketwatch.com
  • prweb.com
  • debt.org
  • singlecare.com
  • nerdwallet.com
  • cnbc.com
  • fool.com
  • debtcleanse.com
  • census.gov
  • marcus.com
  • statista.com
  • forbes.com
  • nasdaq.com
  • daveramsey.com
Share this Statistic:

Download a Zero Fee Case Study

Learn more about how Zero Fee Processing has actually put money back in the pockets of a real-life business owner.

Related Posts

coffee shop employee giving good customer service

Customer Service Statistics

Customer Service Statistics (Updated February 2021)  Most businesses who are winning in this day and age make it a priority to give their customers the [...]

Read More
customer making retail return

Retail Returns Statistics

Retail Returns Statistics (Updated February 2021)  Returns are costing retailers more and more each year. The increasing return rate is mostly due to the increase [...]

Read More
student loan debt

Student Loan Debt Statistics

Read More
girl trying to figure out why there's a charge that shouldn't be there

Chargeback Statistics

Chargeback Statistics (Updated September 2021)  Chargebacks are a huge headache for any business. Not only do businesses lose profit and merchandise, they often have to [...]

Read More

Request A Call From A Dual Payments Representative

We know you’ve got questions. You could spend the day reading every word of our website, but you might find answers more quickly by just asking someone from our team. That’s what we’re here for!

Download a Zero Fee Case Study

Learn more about how Zero Fee Processing has actually put money back in the pockets of a real-life business owner.

Don't have time to read it all right now?​

Download your free PDF of “The Complete Guide to Credit Card Processing“. Just give us your email and we’ll send it to you right away!

Example of High Risk Merchants

  • 1-900 Phone companies – If you’re the type of company that charges people to have a chat on the phone, you’ll be considered high risk.
  • Adult Bookstores – Clearly a part of the adult entertainment industry, and an easy mark for the high risk tag.
  • Adult Entertainment – Any business labeled with the “adult” descriptor will automatically be assigned a high risk status.
  • Adult Toys – As “adult” is in the name, it’s an easy target for association with the adult entertainment market.
  • Airline Industry – Due to cancellations on high ticket purchases, this will put your airline company in the high risk category
  • Amazon Stores – By having a high rate of return, Amazon stores are seen as high risk.
  • Ammo Sales – Association with the weapons industry guarantees high risk status.
  • Annual Contracts – Any time an annual contract is involved it can be considered highrisk because most consumers forget they signed up and chance of chargeback can be high.
  • Antiques – With a high average ticket per item, antiques are considered a risky merchant type.
  • Astrology – The study of the celestial bodies and the influence on human affairs can be a chargeback target if customers feel like they aren’t getting the answers they want.
  • Auctions – Because of the nature of bidding on a product and not having a set price the risk level goes up.
  • Autographed Collectables – There is almost always a question as to whether an autograph is authentic, and therefore chargebacks are much higher in this industry.
  • Automotive Brokers – Brokers of automobiles have a very high average ticket are are therefore of higher risk.
  • Bankruptcy Attorneys – Since the people who are working with bankruptcy attorneys are usually in financial trouble, the odds that a payment would be charged back is higher.
  • Betting Services – In many states betting is illegal but for the legal states betting with a credit card has huge chargeback implications.
  • Brokering – When a third party is involved with selling a product the risk level goes up ten fold.
  • Business Loans (Merchant Cash Advances) – Loaning money is always risky, but with business loans and startup lending, high risk is present by the nature of the business.
  • Casino – Just like a betting service, if a customer gambles with their credit card the chargeback rate sky rockets.
  • CBD Products – CBD itself poses high chargebacks because of the legitimacy of the product and the health benefits promised.
  • CBD E commerce – CBD E Commerce has twice the charge back of retail CBD because many consumers don’t feel like the product they receive gives them the benefits promised.
  • Check Cashing (Check Processing) – The level of fraud in check cashing and cash advances is what gives this industry a higher risk consideration.
  • Cigarettes – With higher levels of risk for theft and criminal activity, cigarette sales are deemed high risk.
  • Collection Agencies (Collection Agency) – Many banks see collections as an unsustainable business model that is many times unreliable.
  • Collectible Coins – A higher level of chargeback in this industry gives it a high risk tag.
  • Collectible Currency – Due to the level of inauthentic collectibles, the risk of chargebacks are much higher with collectibles.
  • Copyrighted eBooks – When someone sells something copyrighted without permission many legal issues can arise.
  • Coupon Programs – With many coupon programs the coupons expire and once they expire the consumer wants the money back they spend.
  • Credit Counseling – Due to their clients usually being in financial problems, this industry is fraught with non-payment and fraud.
  • Credit Protection – Most people that need credit protection are bad with money so chargebacks abound.
  • Credit Repair – If a consumer needs credit repair then chances are they are a high risk for chargebacks.
  • Currency Sales – Many businesses that exchange currency do it at incorrect rates hence more chargebacks.
  • Dating Services – Dating is a volatile industry, and is also lumped in with the adult entertainment industry, making it a high risk account.
  • Debt Collection Services – As the collection of debt isn’t always possible, this industry retains the tag of risky.
  • Debt Consolidation Services (Debt Consolidators) – Consolidating debt is a challenging business and as debt is usually the problem, it’s seen as unsecure from a payment perspective.
  • Debt Repair Services – Since the clients of debt repair services are usually having financial challenges, it makes this industry seem a higher risk.
  • Discount Health Programs – Many people don’t feel they are really getting a discount so they try to get their money back and if they don’t the chargebacks sky rocket.
  • Discount Medical Care Programs – Just like the discount health programs if they don’t save the consumer wants their money back.
  • Drug Paraphernalia – Anything that is associated with the drug trade is considered high risk. Offshore merchant accounts are commonly used for this type of business.
  • E Commerce – As the source of the payment is unverifiable at the point of sale, any transaction without the card present has a higher risk of credit card fraud.
  • Ebay Stores – Many people sell items that aren’t as described so chargebacks can be an issue.
  • Electronic cigarettes – much like traditional cigarettes, e-cigarette sales are also deemed high risk.
  • Electronics – This industry has a much higher ticket compared with many other businesses. A chargeback for a $3,000 tv or two and your account can be in jeopardy rather quickly.
  • Escort Services – This is deemed a part of the adult entertainment industry and therefore needs a high risk merchant account and payment solution.
  • Event Ticket Brokers – If a customer buys a ticket and doesn’t use it they feel like they can charge the transaction back.
  • Extended Warranty Companies – Warranties are rarely used so people try to charge back the money that has been spent paying for them.
  • Federal Firearms License Dealers – Any organization associated with guns or firearms is automatically considered in this category.
  • Fantasy Sports Websites – Just like gambling, if a person starts to lose too often they try and charge back the transaction.
  • Finance Brokers – The entire financing industry is risky. By simply extending credit to other individuals, this business is betting that a majority of them will actually pay what they say they will.
  • Financial Advising/Consulting – The high risk tag on financial advisors isn’t about the advisors or their firm. It’s about the clientele and their current circumstances.
  • Financial Loan Modification Services – Due to a clientele in financial struggles, the high risk term is applied to any payments in this industry.
  • Financial Planning – Anything that includes risk for the consumer can have consumer implications with chargebacks.
  • Financial Strategy – Another risk and reward category, if money is lost, consumers try charging back making this a high risk industry.
  • Fortune Tellers – When a person doesn’t hear what they want to hear, or what is told doesn’t happen, the fortune teller can receive huge chargebacks.
  • Furniture Sellers – High risk only when its custom furniture.
  • Gambling – If money is lost the chargebacks rise.
  • Gaming – Chargeback levels skyrocket when consumers don’t win.
  • Get Rich Quick Programs – It’s rather common in this industry for an individual to purchase the training and then chargeback their purchase saying it didn’t deliver on what was promised.
  • Google Stores – With a high rate of return on their items, Google stores are considered high risk.
  • Gun Sales (Firearm Sales) – The gun and projectile industry is automatically associated with high risk credit card processing.
  • High Average Ticket Sales – With any high average ticket, just a couple of chargebacks can mean a massive shift in how risky the account is deemed by the processor.
  • Home/Vacation Rentals – Many issues with chargebacks can take place if the consumer decides not to travel.
  • Horoscopes – Many people believe this is hocum so will chargeback transactions.
  • How To Programs – A common practice in this industry is to purchase the program and charge it back with the description that it didn’t deliver what it promised.
  • Hypnotists – Many merchants will charge back these transactions if results they hoped for were not met.
  • Import/Export Business – Another example of taking goods over country borders which automatically brings in additional risk to any processing account.
  • Indirect Financial Consulting – When using a third party to consult, the high risk status gives the processor fraud protection.
  • International Cargo – Any time you introduce a multi-country element to credit card processing, the ability for fraud to be introduced skyrockets.
  • International Merchants operating in the US – Since the merchant isn’t operating from the United States, there are many unknowns about what is happening on the other side of their business, thus increasing the risk.
  • International Shipping – Transporting goods between countries is risky and introduces all sorts of elements to the financial stability of any transaction.
  • Investment Books – consumers get upset if the investor isn’t right which can lead to chargebacks.
  • Investment Firms – As investments are never a “sure thing” this is considered a risky industry for having a merchant account.
  • Investment Strategy – Anything with future promises can lead to chargeback.
  • Knife Sales – weapons of any kind are automatically given high risk status.
  • Kratom E Commerce – Accepting payments online is high risk, and Kratom is a substance in the health and wellness industry, which is also considered high risk.
  • Life Coaching – With no tangible goods involved in the transaction, life coaching is considered high risk.
  • Lingerie Businesses – Associated with the adult entertainment industry, chargebacks abound.
  • Lotteries – In most states you can buy lottery tickets with a credit card but if you’re allowed to and the ticket is not a winner, consumers try to chargeback the transactions.
  • Magazine Sales – Many magazine sales are recurring subscriptions, which can have issues with chargebacks.
  • Magazine Subscriptions – Same as magazine sales chargebacks can be huge when a recurring subscription happens. (often referred to as recurring billing.)
  • Mail Order Companies – When something is ordered through the mail chargeback risk can go up.
  • Marijuana Dispensaries – As marijuana isn’t a legal substance in every state, this is considered high risk due to the legality of the product. Cannabis credit card processing is available through Shift Processing.
  • Matchmaking Services – Another branch of the dating tree, and often associated with the adult entertainment industry.
  • Medical Devices – If a medical device doesn’t do what’s promised the purchaser may chargeback the transaction.
  • Membership Organizations – This is another instance of where the transactions don’t have any tangible product and are easily charged back to the merchant account.
  • Merchants on the MATCH list – If you are a merchant who has been reported to the MATCH list (Member Alert to Control High Risk Merchants) or the TMF (Terminated Merchant File) you are given high risk status.
  • Merchants with Poor Credit – Merchant accounts are given based on the credit score of the business owner. It’s assumed that the business owner is going to be making the financial decisions for the business, and a poor credit score reflects on the viability of any business transactions.
  • Modeling Agencies – At many agencies models are promised the world and it doesn’t happen. The consumer then wants their money back.
  • Movie Downloads – Transference of a digital product is considered of higher risk. Also, rarely is a physical card present at time of purchase.
  • Multilevel Marketing Sales – Often associated with pyramid schemes, MLM sales are considered a risky business.
  • Music Downloads – Purchasing any digital product is considered to be of higher risk than a physical transaction. Most of the time the card is not present in a digital transaction using a shopping cart.
  • Not A US Citizen Doing Business In The US – It’s possible to get a merchant account without a US social security number, but not having a SSN will increase the risk the processor will have in issuing a merchant account for your business.
  • Online Adult Membership Sites – If you’re running a website that is adult themed and requires payment for access, this is a highly volatile account and definitely high risk.
  • Offshore Corporations (Offshore Merchants) – The international element is what gives the high risk tag when looking for domestic merchant accounts.
  • Online Gambling (Online Gaming) – Without a card being present and gambling as the activity, there are two reasons why this would be on this list. Online payment alone is risky even without the gambling element.
  • Overseas Exporting Services – The introduction of the international element is what gains access to this list.
  • Pawn Shops – There’s a general stigma that goes along with pawn shops, and it’s reflected in their assignment to the high risk processors list.
  • Penny Auction Sites – Even though the customers are usually bidding at only a penny more per bid, users will commonly charge back the transaction when they don’t win.
  • Pepper Spray – Considered a type of weapon, pepper spray vendors are considered risky.
  • Points Programs – Points programs that cost money can cause chargeback issues if points are not used.
  • Pornographic Merchants – If you’re a part of the adult entertainment industry in any way, you’re considered high risk.
  • Precious Metals – Counterfeit metals can be a problem in this industry, making it more risky to accept payments for.
  • Prepaid Calling Cards – Anything prepaid that a consumer may not use increases chargeback issues.
  • Prepaid Debit Cards – When they expire or are lost consumers want their money back.
  • Psychic Services – “Honey, did you visit a psychic? No babe, I don’t remember visiting a psychic.” I’ll just reverse that charge then.
  • Real Estate – A common target for scams and identity theft is how real estate makes this list.
  • Replica Products (Watches, Handbags, Wallets, Sunglasses, Etc…) – As the product being sold isn’t authentic to the original manufacturer, the percentage of requests for refund is much higher than a traditional merchant.
  • Rewards Programs – If rewards are not spent, the consumer wants the money back.
  • Self-Defense – Since the payment provided is for instruction and not a physical product, the self-defense industry makes this list.
  • Self-Hypnosis Services – Yet another instance where the goods being transferred are of a service and not a physical product.
  • SEO Services – With a high rate of request for refund, SEO agencies make this list.
  • Social Networking Sites – Just like a dating site, if a consumer does not get what they want from it, they always like to chargeback.
  • Software Downloads – The software industry makes their way on to this list because of the digital nature of the goods being sold.
  • Sports Forecasting – An example of paying for information and not for a product, and usually not in person where the card would be present for the transaction.
  • Startups – Every startup is considered risky, and the percentage of startups that make it is quite small compared to the number that fail.
  • Student Loans – With the cost of a college education continually on the rise, so is the percentage of loans that default and never receive payment.
  • Strip Clubs – Associated with the adult entertainment industry gains the strip club access to this list.
  • Stun Gun Sales – considered a type of weapon, which makes it a high risk merchant.
  • Supplement Sales – The request for refund in this industry is quite high due to the nature of the product.
  • Sweepstakes – “Hey, I entered a sweepstake and I didn’t win. I’d like my money back please.”
  • Talent Agencies – “I paid thousands of dollars for headshots and glamorous outfits and I haven’t gotten any paid gigs. Pay me back my money please.”
  • Telemarketing Services – Telemarketing services many times do not have the results the purchaser would like to see, so the services are charged back.
  • Telephone Order Sales – Anything ordered over the phone has a increased risk of chargeback.
  • Timeshare Companies – When timeshares aren’t used, people want their money back.
  • Travel Agencies – If trips are not taken, consumers would like their funds returned.
  • Travel Clubs – Many travel club discounts aren’t what they were promised, increasing risk for chargebacks.
  • Vacation Rental Brokers – Third party brokers on prepaid vacation can have issues when customers cancel their trips.
  • Vape Shops – The level of criminal activity and theft is higher with vape shop merchants and therefore carries a high risk label.
  • Vitamin Sales – If the vitamins don’t provide the results the merchant would like to see they chargeback the transactions.
  • Web Designer – Because this service is prone to chargebacks, it has been classified as high risk.
  • Weight Loss – Considered risky because the results aren’t really up to the company, but rather the individual has to stick to the plan to get results, often resulting in chargebacks.
  • Yahoo Stores – Since the goods sold through Yahoo can easily be returned, they are considered a risky merchant.

Turn Your Residuals into Immediate Cash Today

Selling your residuals doesn’t impact your merchants—they’ll keep processing happily. So, if you need extra funds, explore a credit card residual buyout. It’s fast, easy, and a smart move for your financial game plan.