Debt Management

Household Debt Report

U.S. households paid off roughly $170 billion in debt during the past quarter

WalletHub’s Household Debt Report adjusts data for inflation to accurately show how debt compares to historical levels. View the complete report findings and infographics here.

U.S. households paid off $170 billion in debt during Q2 2023 – roughly 216% more than the average Q2 change over the past 19 years. As a result, U.S. households collectively owed $17.13 trillion to start Q3 2023.

In order to get a better understanding of the current household debt situation and how it compares to the past, WalletHub uses the latest data from the New York Fed but adjusts it for inflation. Adjusting for inflation is key as it accurately shows how debt compares to historical levels.

Key Stats:

  • Consumers paid down a total of $170 billion in debt during Q2 2023 – 21% more than in Q1 2023 and 5% less compared to Q2 2022.
  • Total household debt fell to $17.13 trillion in Q2 2023, and WalletHub now projects that U.S. households will end the year with $350+ billion more debt than they started with.
  • The average household owed a total of $143,762 at the end of Q2 2023, only $14,339 below WalletHub’s projected breaking point for household finances.
  • Household mortgage debt decreased by roughly $161 billion in Q2 2023 – the sixth biggest Q2 paydown since 2004.
  • Auto loan debt increased by $3 billion in Q2 2023 – the first second-quarter increase since 2020.
  • Debt from home equity lines of credit (HELOC) fell by $2.7 billion in Q2 2023 – the 15th consecutive Q2 paydown but the fifth smallest overall.
  • Total student loan debt decreased by $52 billion in Q2 2023 – the second biggest Q2 paydown since 2004.

Q&A with WalletHub

All figures referenced below are adjusted for inflation.

Are U.S. households adding debt or paying off what they owe?

“Through the first two quarters of 2023, U.S. households have paid off roughly $310 billion in debt, including $170 billion during the second quarter. That’s the good news,” said Jill Gonzalez, WalletHub analyst. “The bad news is that U.S. households paid off more debt through the first half of 2022, when you adjust for inflation, and we ended 2022 with $328 billion in more debt than we started with. Based on the latest statistics, there’s no reason to think 2023 won’t be the same.”

How far are household finances from the breaking point?

“The average household has roughly $143,762 in debt right now, according to WalletHub’s latest Household Debt Study. Based on our analysis of debt during the Great Recession, the average household is about $14,339 away from truly having to worry about defaulting,” said Jill Gonzalez, WalletHub analyst.

Are there any noteworthy trends in the latest household debt statistics?

“Debt from mortgages, home equity lines of credit and student loans declined during the second quarter of the year, continuing years-long streaks of Q2 debt reduction in these segments. Adjusted for inflation, mortgage and student loan debt even declined faster during the second quarter of 2023 than the same period last year. Unfortunately, the third and fourth quarters of the year are typically characterized by increased debt.,” said Jill Gonzalez, WalletHub analyst.

How attractive are balance transfer credit card deals right now?

“The best balance transfer credit cards currently offer 0% introductory APRs for as long as 21 months, and the average 0% period has gotten slightly longer in the past year. The problem for many consumers is that the best cards typically require at least a 700 credit score for good approval odds and a balance transfer fee of around 3%,” said Jill Gonzalez, WalletHub analyst. “Fortunately, people with fair credit scores in the 640-699 range may still have some good options available to them at the moment. For example, the First Tech Choice Rewards World Mastercard offers a 0% introductory balance transfer APR for 12 months and doesn’t charge either a balance transfer fee or an annual fee.”