The Growing Personal Debt Crisis in America: Average Debt Levels and Impact of Inflation and Interest Rates

The average personal debt levels in America have increased slightly over the past year, with the average person owing nearly $23,000, excluding mortgages. This data comes from a recent study conducted by financial services company Northwestern Mutual, which found that the average personal debt per individual grew from $21,800 in 2023 to $22,713 in 2024.

The study also revealed that 66% of respondents reported holding at least some debt, with credit cards and auto loans being the primary sources of debt for most individuals. Credit card debt, in particular, accounted for a record-breaking $1.13 trillion of the overall U.S. household debt, according to data from the New York Federal Reserve.

Interestingly, the study also highlighted the generational differences in personal debt levels, with Gen Xers and millennials carrying the most debt on average. Despite this, more than 60% of respondents from these age groups admitted to not having a specific plan to pay off their debt.

Inflation and rising interest rates were cited as key factors impacting Americans’ ability to pay off their debts. The study found that more people are uncertain about how they will pay back their debt, with only 59% of borrowers having a specific plan in place compared to 61% last year.

Overall, the findings suggest that Americans are facing a double dilemma when it comes to their debt levels, with inflation and higher interest rates putting additional strain on their finances. As a result, many individuals are struggling to balance their current spending needs with their future savings goals.

The study’s chief customer officer, Christian Mitchell, emphasized the importance of addressing these challenges, stating that inflation and higher interest rates are leaving a mark on Americans’ debt levels. As individuals navigate these financial hurdles, it becomes increasingly important to have a solid plan in place for managing and paying off debt.

For more insights on managing debt and navigating financial challenges, check out the latest articles on Money.com.