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Consumer Debt Trends in 2023

Consumers in the United States owed $17.1 trillion in total debt as of the third quarter (Q3) of 2023, according to Experian data. This article explores the trends in consumer debt, highlighting key areas of growth and change.

Overall Debt Levels Slow but Still Increase

The total consumer debt balance increased to $17.1 trillion in 2023, up 4.4% from 2022’s $16.38 trillion total. Growth in 2023 was slower than the 7% increase from 2021 to 2022. With the exception of student loan debt, almost every major category of consumer debt increased in the 12 months that concluded with Q3 2023.

Mortgage debt, which comprises nearly two-thirds of all consumer debt, grew at a modest 3.2%, to $11.6 trillion as of Q3 2023. High mortgage rates and a poor housing supply discouraged many would-be homebuyers from purchasing homes.

Southern States See Higher Growth in Average Consumer Debt Balance

Average debt balances increased in every state in 2023. The larger increases were in Southern states: Alabama, Florida, North Carolina, Oklahoma, South Carolina, and Texas each saw average total debt balances increase by 4% or more, versus the national average of 2.3% growth.

Average Overall Debt Increased Most for Those With Poor Credit

Consumers with poor credit saw their debt balances increase significantly from 2022—more than 20%. Borrowing costs for these consumers were already high when the year began and were only ratcheted higher as interest rates climbed.

Older Generations Shed Some Debt While Younger Consumers Carry More

Older consumers began to shed some of their overall debt in 2023, while millennials and Generation Z saw their debt balances grow by 8% and 15.4%, respectively. Generation X registered a modest increase of 1.9% in 2023.

Mortgage Debt Increases Alongside Higher Mortgage Rates

Although the housing market remains subdued, home prices remain elevated. Most new homeowners are likely paying much more in mortgage interest than their more established neighbors.

Auto Loan Debt Moderates for Most Generations

While the sticker prices of cars are still high, they leveled off in 2023 as the automotive market has mostly recovered from supply shortages. Consumers have generally been able to keep a lid on auto loan balances.

Student Loan Debt Flat in 2023; Now Payments and Debt Cancellations Resume

Federal student loan repayments and interest remained paused throughout the 12 months observed in this year’s Consumer Debt Study. However, student loan balances have already declined by more than $120 billion since early 2020.

Gen Xers Carry Significantly Larger Average Credit Card Balances

Generation X consumers, who are in their mid-40s to mid-50s, have average credit card balances of $9,123, which are 40% greater than the national average of $6,501. These consumers are likely to have multiple monthly payments to service.

Personal Loan Debt up; Some Borrowers Continue to Pivot to Fixed-Rate Loans

Both types of personal loans grew at double-digit rates in 2023 as debt consolidation became the primary animating factor to get consumers out of increasing variable-rate credit balances.

Consumer Debt in 2024: Credit Card, Auto Loans in Focus

Throughout 2023, rising interest rates on variable-rate credit cards were a constant cause of concern. Fortunately, entering 2024, average wages continue to outpace inflation, and unemployment remains below 4% nationwide.

For any mortgage service needs, contact O1ne Mortgage at 213-732-3074. Our team is ready to assist you with the best mortgage solutions tailored to your needs.

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