Consumer Debt Continued to Grow in 2021 Amid Economic Uncertainty

Quick Answer

Consumer debt balances increased by 5.4% in Q3 2021 to $15.31 trillion, a $772 billion increase from 2020.

People are walking down a busy street with buildings on each side with a data graphic showing total consumer debt and total average balance numbers.

Despite significant economic headwinds in 2021—inflation, supply shortages and restrictions on certain businesses due to the pandemic—lenders appeared willing to extend credit to those people able to take advantage of it. More than a year into the pandemic, consumers appeared to be managing their debts well, as delinquency rates on debt payments were largely stable.

Nonetheless, consumer confidence remains low, with inflation and the persistence of pandemic-related weariness casting a shadow over what would typically be considered a sharp economic rebound. But the decade, so far, has been far from ordinary.

As part of our ongoing review of consumer debt and credit in the U.S., Experian examined representative credit data from the third quarter (Q3) of 2019, 2020 and 2021 to identify trends within balance and delinquency data for household credit categories.

Overall Debt Levels Increase 5.4%

Total consumer debt balances increased 5.4% from 2020 to 2021 to $15.31 trillion, a $772 billion increase—and more than double the 2.7% increase from 2019 through 2020.

Total Consumer Debt
2019 2020 2021 2020-2021 Change
Total debt $14.14T $14.53T $15.31T +5.4%

Source: Experian data from Q3 of each year

Mortgages and auto loans, by far the two largest components of a consumer's budget, experienced the fastest year-over-year growth of any debt category. The total mortgage balance grew by 7.6% over the previous 12 months to a total of $10.29 trillion in 2021, and the total auto loan and lease balance grew by 5.8% to $1.43 trillion.

The increases were especially notable as they occurred despite widespread housing and auto inventory shortages for much of the year. Those consumers who were able to find homes and autos to purchase had to finance them with larger loans.

Total Debt Balance by Debt Type
2020 2021 Change
Mortgage $9.56T $10.29T +7.6%
Home equity $117.70B $108.37B -7.9%
HELOC $340.11B $295.51B -13.1%
Student loan $1.57T $1.60T +1.9%
Auto loan and lease $1.35T $1.43T +5.8%
Credit card $788.29B $784.50B -0.5%
Retail credit card $114.86B $111.62B -2.8%
Personal loan $411.80B $436.18B +5.9%

Source: Experian data from Q3 of each year

Although there was a healthy increase in the major loan category balances of mortgages and auto loans, balances fell for other loan types, a continuation of a trend that has persisted for several years.

  • Home equity loan and HELOC balances continued their multiyear decline, even though industry estimates indicate significant increases in what were already record-setting levels of untapped home equity available to homeowners, according to Black Knight Inc., a mortgage industry observer. Homeowners have $9.4 trillion in untapped home equity available, according to the firm.
  • Total student loan balances, tempered by pauses on federal student loan repayment, interest and collections, grew at 1.8% percent in 2021—slower than the 12.1% balance growth in 2020.
  • Overall credit card balances were slightly lower, both for retail cards and traditional credit cards. Though not as precipitous as the 9% drop in balances in 2020, the overall balance for these two types of credit cards fell by a combined 0.8%, or $7 billion, to $896.12 billion.

Average balances per account show a similar picture, with mortgage and auto loans growing, and average credit card and HELOC balances declining.

Average Consumer Debt Balance by Debt Type
2020 2021 Change
Mortgage $208,185 $220,380 +5.9%
HELOC $41,954 $39,556 -5.7%
Student loan $38,792 $39,487 +1.8%
Auto loan and lease $19,703 $20,987 +6.5%
Credit card $5,315 $5,221 -1.8%
Personal loan $16,458 $17,064 +3.7%
Total average balance $92,727 $96,371 +3.9%

Source: Experian data from Q3 of each year

Average Consumer Debt Increases in Every State

All 50 states and Washington, D.C., experienced increases in average balances in 2021. The larger increases were in the Western states, most of which saw average debt balances grow by 5% or more. Maine and Washington, D.C., also experienced significant balance increases in 2021. Connecticut and Delaware experienced the two smallest increases in average debt last year, but each still grew average balances more than 1%.

Total Average Consumer Debt by State
Average FICO® Score 2021 2020 2021 Change
Alabama 691 $69,628 $72,138 +3.6%
Alaska 717 $108,208 $111,037 +2.6%
Arizona 710 $98,346 $103,326 +5.1%
Arkansas 694 $67,045 $69,010 +2.9%
California 721 $130,793 $137,301 +5%
Colorado 728 $131,995 $140,327 +6.3%
Connecticut 726 $105,109 $106,345 +1.2%
Delaware 714 $98,759 $100,282 +1.5%
District of Columbia 717 $148,041 $159,957 +8%
Florida 707 $81,504 $84,926 +4.2%
Georgia 693 $84,349 $87,131 +3.3%
Hawaii 732 $133,903 $138,274 +3.3%
Idaho 725 $97,803 $104,944 +7.3%
Illinois 719 $83,968 $85,991 +2.4%
Indiana 712 $71,801 $73,995 +3.1%
Iowa 729 $73,979 $76,596 +3.5%
Kansas 721 $73,123 $76,090 +4.1%
Kentucky 702 $67,029 $68,685 +2.5%
Louisiana 689 $73,225 $75,373 +2.9%
Maine 727 $77,537 $81,480 +5.1%
Maryland 716 $123,320 $126,687 +2.7%
Massachusetts 732 $115,671 $120,370 +4.1%
Michigan 719 $70,313 $72,735 +3.4%
Minnesota 742 $96,832 $100,710 +4%
Mississippi 681 $58,204 $60,615 +4.1%
Missouri 711 $75,292 $77,537 +3%
Montana 730 $89,282 $94,008 +5.3%
Nebraska 731 $76,652 $79,916 +4.3%
Nevada 701 $101,727 $105,281 +3.5%
New Hampshire 734 $95,504 $99,024 +3.7%
New Jersey 725 $102,096 $105,202 +3%
New Mexico 699 $76,379 $79,194 +3.7%
New York 722 $84,281 $87,353 +3.6%
North Carolina 707 $84,343 $87,160 +3.3%
North Dakota 733 $82,269 $85,210 +3.6%
Ohio 715 $68,754 $70,747 +2.9%
Oklahoma 692 $68,278 $70,196 +2.8%
Oregon 731 $107,440 $112,974 +5.2%
Pennsylvania 724 $77,477 $79,686 +2.9%
Rhode Island 723 $91,788 $94,176 +2.6%
South Carolina 693 $81,215 $84,536 +4.1%
South Dakota 733 $82,118 $83,699 +1.9%
Tennessee 701 $79,903 $83,716 +4.8%
Texas 692 $81,360 $84,744 +4.2%
Utah 727 $114,293 $122,474 +7.2%
Vermont 736 $83,335 $86,275 +3.5%
Virginia 721 $118,776 $122,273 +2.9%
Washington 734 $127,333 $136,170 +6.9%
West Virginia 699 $59,113 $60,907 +3%
Wisconsin 735 $78,272 $81,220 +3.8%
Wyoming 722 $97,189 $102,366 +5.3%

Source: Experian data from Q3 of each year

Differences in Debt Between Older and Younger Borrowers

Baby boomers have now joined the silent generation in decreasing their overall debt levels year over year, as that generation slides firmly into retirement age.

Total Average Debt by Generation
2020 2021 Change
Generation Z (18-24) $16,043 $20,803 +29.7%
Millennials (25-40) $87,448 $100,906 +15.4%
Generation X (41-56) $140,643 $146,164 +3.9%
Baby boomers (57-75) $97,290 $95,607 -1.7%
Silent generation (76+) $41,281 $39,859 -3.4%

Source: Experian data from Q3 of each year; ages as of 2021

The nearly 30% jump in average debt balance for the youngest generation, while significant, isn't entirely unexpected. It's still the smallest average balance of any generation, but the parade of firsts Generation Z are experiencing—possibly buying a car, moving, attending college—can bring new debt obligations to what was previously a simpler budget.

And debt changes seen among older generations are following an expected pattern of their own. Balances tend to peak in one's 40s and 50s, the years when costs are both numerous and expensive, and decline again as big-ticket items such as mortgages and student loans are paid off.

Credit Scores Increase as Delinquencies Remain Steady Overall

In 2021, average debt balances grew for consumers with good or better FICO® Scores, and declined for those with fair or poor credit scores. For higher-scoring consumers, this increase in balances was a rebound from 2020, when balances of all consumers dipped as the sharp and sudden economic pullback slowed new spending and purchases. Consumers with poor and fair credit scores reduced their average balance more in 2021 than they did in 2020.

Total Average Debt by FICO® Score Range
2020 2021 Change
300-579

Poor

$36,185 $33,375 -7.8%
580-669

Fair

$63,364 $62,179 -1.9%
670-739

Good

$89,585 $91,531 2.2%
740-799

Very good

$99,471 $105,492 6.1%
800-850

Exceptional

$133,446 $139,280 4.4%

Source: Experian data from Q3 of each year

In 2021, retail spending rebounded from the depressed levels of early 2020, according to Federal Reserve data, and consumers with the ability to borrow were able to make new purchases as well as purchases they put off in 2020. Even though spending appears to have picked up again, delinquency rates remain relatively low, which shows that borrowers are similarly able to maintain their mortgages and other monthly payments.

Overall Delinquency Rates
2020 2021 Change
% of accounts 30-59 days past due 0.98% 1.04% +6.1%
% of accounts 60-89 days past due 0.58% 0.58% 0%
% of accounts 90-180 days past due 0.37% 0.34% -8.1%

Source: Experian data from Q3 of each year

Different Types of Debt See Various Patterns Emerge

While the total debt balance among consumers continued to rise, each type of debt told a different story.

Mortgage Debt

Borrowing for a home, while not easy, may be easier than finding one, as much of the nation is experiencing an acute housing shortage. But that also means successful buyers may need larger mortgages to purchase their next home. Much of this increase is already showing up in recent data.

In 2021, mortgage balances for borrowers averaged $220,380 in 2021, a 5.9% increase from 12 months earlier.

Average Mortgage Debt by Generation
2020 2021 Change
Generation Z $169,470 $192,224 13.4%
Millennials $237,349 $261,225 10.1%
Generation X $247,564 $259,437 4.8%
Baby boomers $178,688 $182,247 2%
Silent generation $133,827 $135,162 1%

Source: Experian data from Q3 of each year; ages as of 2021

While the more than 13% jump in Generation Z mortgage balances may appear startling, keep in mind that currently this generation represents less than 1% of all mortgage borrowers. As they get older and increase their incomes, their share is certain to increase.

More noteworthy is that millennials now have the distinction of being the generation with the highest average mortgage balance, ousting Generation X. As with overall debt, this makes sense: Millennials now tend to be homebuyers, whereas Generation X and older are more commonly the ones selling homes, according to National Association of Realtors data. Millennials are also more likely to be in their first year of paying down a 15- or 30-year mortgage, while more established homeowners have either significantly paid down a previously existing mortgage, or refinanced at a more favorable rate.

What continues to puzzle some lenders and economists is the amount of home equity that remains untapped, and the reluctance of many homeowners to use the equity to pay down what are usually higher-rate credit card balances, even when HELOC borrowing rates were lower. This is also evident in HELOC balances, which continued a multiyear decline.

Auto Loan Debt

Besides housing, the other big seller's market in 2021 was the automotive sector. Prices for used vehicles increased by 40.5% and new-vehicle prices climbed 12.2% in 2021, according to the U.S. Bureau of Labor Statistics. Auto loan balances grew by 5.8% as persistently low inventories induced sticker shock for some buyers.

Younger generations, often purchasing their first car, have higher average auto loan balances. But balances increased across the board, even among the silent generation, who have the fewest auto loans per person among all generations.

Average Auto Loan Debt by Generation
2020 2021 Change
Generation Z $15,724 $17,241 +9.6%
Millennials $19,011 $20,855 +9.7%
Generation X $22,307 $23,855 +6.9%
Baby boomers $19,306 $19,972 +3.4%
Silent generation $14,750 $15,063 +2.1%

Source: Experian data from Q3 of each year; ages as of 2021

Student Loan Debt

Federal student loan repayments and interest were paused throughout 2021 as part of a flurry of initial government responses to the pandemic in March 2020. (The pause was recently extended again, into fall 2022.) Despite the pause, student loan balances still increased as newer loans entered repayment, even though there's no payment yet due on most loans.

Average Student Loan Debt by Generation
2020 2021 Change
Generation Z $17,338 $18,878 +8.9%
Millennials $38,877 $40,247 +3.5%
Generation X $45,095 $46,317 +2.7%
Baby boomers $40,512 $42,351 +4.5%
Silent generation $28,052 $29,492 +5.1%

Source: Experian data from Q3 of each year; ages as of 2021

Predictably, the youngest student loan borrowers saw the greatest increase, as many have recently entered college or graduated. Balances of older generations increased as well, as they're often parents who may have taken a student loan to finance a family member's education.

Credit Card Debt

Generation Z began coming into their own in 2021 and started to finance their expenses with revolving credit. Balances for the generation born after 1996 grew by 12%, as the oldest of them began to finance both major and minor purchases.

Average Credit Card Debt by Generation
2020 2021 Change
Generation Z $2,044 $2,282 +11.6%
Millennials $4,350 $4,576 +5.2%
Generation X $7,185 $7,070 -1.6%
Baby boomers $6,089 $5,804 -4.7%
Silent generation $3,277 $3,177 -3.1%

Source: Experian data from Q3 of each year; ages as of 2021

Average credit card balances of millennials (those ages 25 to 40 in 2021) grew more modestly to $4,576 in 2021, up 5.2% from 2020. But the three older generations actually had lower average balances last year. Typically, only the oldest cohort in our analysis (the silent generation) experiences year-over-year balance declines. A number of factors tied to economic activity surrounding the pandemic may explain this, at least in part. One was the extension of stimulus payments and additional tax credits to many U.S. households in 2020 and 2021, which gave some borrowers the opportunity to pay down balances.

As important is the pandemic's dramatic effect on the typical basket of goods and services consumers have to choose from, as there were fewer destinations like restaurants and vacations that tend to incur both large and small credit card transactions.

Personal Loan Debt

Personal loan balances grew by 5.9% overall in 2021 to $436.18 billion in 2021, as more consumers took out these installment loans.

Average Personal Loan Debt by Generation
2020 2021 Change
Generation Z $6,004 $6,658 +10.9%
Millennials $12,306 $13,418 +9%
Generation X $17,733 $18,922 +6.7%
Baby boomers $19,700 $20,370 +3.4%
Silent generation $17,123 $17,334 +1.2%

Source: Experian data from Q3 of each year; ages as of 2021

As with credit cards, younger consumers may not yet have the expenses more typical of older generations, such as financing a family vacation, making home repairs or consolidating other debts with a large personal loan.

Total Personal Loan Debt by Type
2020 2021 Change
Unsecured personal loans $127.27B $133.17B +4.6%
Secured personal loans $284.53B $303.01B +6.5%

Source: Experian data from Q3 of each year

Unsecured personal loans, which aren't backed by collateral, grew by 4.6% in 2021 to $133.17 billion. Typically, these are lump-sum loans that are paid back in three to five years in fixed monthly payments. Personal loans are often used for debt consolidation, weddings and home renovations.

Secured personal loans, which are backed by collateral, grew at an even greater rate of 6.5% in 2021.

Factors Helping Consumers Manage Debt

Despite significant whipsaw effects in the U.S. economy—uncertain personal income streams, supply shortages and now inflation—consumers still have the willingness and ability to finance purchases.

Delinquencies remain low, suggesting that consumers remain able to effectively manage their debts. Three major tools available to borrowers have been:

  • An increase in income: Wages increased by 4.2% from September 2020 through September 2021, and have grown at an even greater rate since.
  • Lasting impact from pandemic-related federal assistance programs: Based on expanded unemployment insurance, multiple rounds of one-time stimulus checks and the ability of millions of homeowners and student loan borrowers to enter forbearance or otherwise pause payments, families were able to increase their median cash balance by 50% over prepandemic levels, according to data from JPMorgan Chase Institute.
  • Refinancing: Homeowners were able to reduce their monthly payments by a collective $1.3 billion per month by refinancing either the rate or the term of their mortgage, according to industry observer Black Knight Inc.

Methodology: The analysis results provided are based on an Experian-created statistically relevant aggregate sampling of our consumer credit database that may include use of the FICO® Score 8 version. Different sampling parameters may generate different findings compared with other similar analysis. Analyzed credit data did not contain personal identification information. Metro areas group counties and cities into specific geographic areas for population censuses and compilations of related statistical data.

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