The Average Personal Loan Balance Rose 7% in 2022

Quick Answer

The average personal loan balance increased by 7% in 2022 to $18,255 as consumers continue to take out new personal loans.

The Average Personal Loan Balance Rose 7% in 2022 article image.

Personal loans don't always garner the media attention of other types of debt, like mortgages, auto loans and credit cards. But with more than 50 million personal loans and half a trillion dollars of personal loan debt outstanding, personal loans are the type of consumer debt that has grown the fastest over the past decade.

Personal loan growth has remained consistent throughout the pandemic era as well, even as the appetite for other types of loans, like mortgages and credit cards, fell at times during the 2020s.

As part of our ongoing review of consumer debt and credit in the U.S., Experian examined representative and anonymized credit data from the third quarter (Q3) of 2019 through Q3 2022 to identify trends within personal loans, both secured and unsecured, in 2022.

Total U.S. Personal Loan Debt Grows 19%

After several years of historically low interest rates both prior to and during the pandemic, consumers in 2022 began to rotate some of their revolving debt from credit cards into fixed-rate personal loans. For many consumers, consolidating debt with a personal loan was a better alternative than watching the variable APR of their credit card balances increase every few months, which was the case for much of the year. Overall, the total balance of personal loans held by consumers grew by 19% to $519.5 billion as of Q3 2022.

Snapshot: Total Personal Loan Debt
2020 2021 2022 2021-2022 Change
Total unsecured personal loans $127.3B$133.2B$177.4B+33.2%
Total secured personal loans $284.5B$303B$342.1B+12.9%
Total combined balance $411.8B$436.2B$519.5B+19.1%

Source: Experian data from Q3 of each year

Total unsecured personal loan balances grew by $44 billion in 2022 to $177.4 billion. The 33% year-over-year growth occurred as the Federal Reserve increased the federal funds rate more rapidly than in previous rate hike cycles over the past 40 years. This current round of Fed rate hikes quickly drove up borrowing rates extended to consumers, especially those with unsecured credit card debt.

Secured personal loans, which some consumers use to borrow against assets they already own, like recreational vehicles and securities such as mutual funds, grew to $342 billion, a 13% increase over last year.

The number of consumers who assumed personal loans increased markedly in 2022 as well. Over 4 million more consumers had at least one personal loan in 2022 than in 2021, a 20.5% jump. The number of personal loans secured by a consumer's assets also grew by 8% in 2022.

Snapshot: Number of Personal Loan Accounts
2020 2021 2022 2021-2022
Change
Total unsecured personal loans 21.72M22.37M26.95M+20.5%
Total secured personal loans 26.18M25.85M27.91M+8%

Source: Experian data from Q3 of each year

Although average personal loan balances also grew, those increases were more in line with the overall increases in inflation, which climbed as high as 9% in 2022. The average personal loan balance of $18,255 is 7% higher than the average 2021 balance. Inflation, as measured by the consumer price index, grew by 8.2% over the same period.

Snapshot: Average Personal Loan Debt
2019 2020 2021 2022 2021-2022 Change
Average personal loan balance $16,259 $16,458 $17,064 $18,255 +7%

Source: Experian data from Q3 of each year

Average Personal Loan Debt Increases in All States

Although there's much variance among the average personal loan balances of the states, all states saw increases in 2022.

Average Personal Loan Balance by State
2021 2022 Change
Alabama$14,429 $15,433 +7%
Alaska $20,631 $21,366 +3.6%
Arizona $21,647 $23,009 +6.3%
Arkansas $20,828 $21,082 +1.2%
California $17,829 $18,896 +6%
Colorado $22,693 $24,538 +8.1%
Connecticut $14,925 $15,412 +3.3%
Delaware $17,219 $18,291 +6.2%
Florida $18,768 $20,111 +7.2%
Georgia $13,461 $14,838 +10.2%
Hawaii $12,538 $15,056 +20.1%
Idaho $23,869 $25,392 +6.4%
Illinois $14,161 $15,321 +8.2%
Indiana $16,287 $17,408 +6.9%
Iowa $18,654 $19,644 +5.3%
Kansas $19,287 $19,789 +2.6%
Kentucky $16,225 $17,299 +6.6%
Louisiana $17,478 $18,374 +5.1%
Maine $17,170 $18,468 +7.6%
Maryland $14,902 $16,312 +9.5%
Massachusetts $14,573 $15,725 +7.9%
Michigan $15,700 $17,027 +8.5%
Minnesota $18,285 $20,259 +10.8%
Mississippi $14,926 $16,045 +7.5%
Missouri $16,943 $18,142 +7.1%
Montana $25,530 $26,934 +5.5%
Nebraska $18,188 $20,111 +10.6%
Nevada $20,259 $21,277 +5%
New Hampshire $17,992 $18,703 +3.9%
New Jersey $14,149 $15,272 +7.9%
New Mexico $19,599 $19,776 +0.9%
New York $14,112 $14,890 +5.5%
North Carolina $16,367 $17,141 +4.7%
North Dakota $23,409 $27,856 +19%
Ohio $15,707 $16,299 +3.8%
Oklahoma $18,055 $18,669 +3.4%
Oregon $28,987 $29,247 +0.9%
Pennsylvania $15,084 $16,145 +7%
Rhode Island $13,960 $15,192 +8.8%
South Carolina $15,404 $17,253 +12%
South Dakota $24,695 $26,742 +8.3%
Tennessee $16,410 $17,788 +8.4%
Texas $16,154 $17,779 +10.1%
Utah $19,832 $21,086 +6.3%
Vermont $18,083 $18,529 +2.5%
Virginia $15,370 $16,765 +9.1%
Washington $29,997 $30,648 +2.2%
District of Columbia $12,241 $12,250 +0.1%
West Virginia $17,832 $18,559 +4.1%
Wisconsin $17,866 $19,039 +6.6%
Wyoming $26,413 $27,428 +3.8%

Source: Experian data from Q3 of each year

Hawaii saw personal loan balances grow more than 20% last year—more than any other state. Some of the other higher rates of increase were in the Plains states, including Minnesota, Nebraska and North Dakota, where personal loan balances grew more than 10% in 2022.

States With the Fastest-Growing Average Personal Loan Balances
2021 2022 Change
Hawaii $12,538 $15,056 +20.1%
North Dakota $23,409 $27,856 +19%
South Carolina $15,404 $17,253 +12%
Minnesota $18,285 $20,259 +10.8%
Nebraska $18,188 $20,111 +10.6%
Georgia $13,461 $14,838 +10.2%
Texas $16,154 $17,779 +10.1%

Source: Experian data from Q3 of each year

The high-balance states in this year's top five are similar to those last year. North Dakota is the only new entry in the list, having pushed out South Dakota. Washington state's average balance of $30,648 leads the nation, with other Northwestern states rounding out the list. Each had an average personal loan balance of $25,000 or more as of Q3 2022.

States With the Highest Average Personal Loan Balances
2021 2022 Change
Washington $29,997 $30,648 +2.2%
Oregon $28,987 $29,247 +0.9%
North Dakota $23,409 $27,856 +19%
Wyoming $26,413 $27,428 +3.8%
Montana $25,530 $26,934 +5.5%

Source: Experian data from Q3 of each year

Average Balances Are Growing Faster Among the Younger Generations

The younger the generation, the faster they're taking on personal loan debt. Although overall average balances grew by 7% in 2022, millennials and Generation Z saw average balances grow at double-digit annual rates. But even the oldest among us, the Silent Generation, saw average balances grow by 5% in 2022.

Average Personal Loan Balance by Generation
2021 2022 Change
Generation Z (18-25) $6,658 $7,684 +15.4%
Millennials (26-41) $13,418 $15,101 +12.5%
Generation X (42-57) $18,922 $20,677 +9.3%
Baby boomers (58-76) $20,370 $21,644 +6.3%
Silent Generation (77+) $17,334 $18,211 +5.1%

Source: Experian data from Q3 of each year; ages as of 2022

Nonetheless, baby boomers remain the generation with the largest average balance on their personal loans, as they're the generation with the plurality of wealth in this nation, as measured by assets.

Lenders Will Be Choosier in 2023

In 2022, borrowing costs for personal loans (and other consumer loans) increased for all consumers. But people with lower credit scores in particular may have a harder time finding an affordable personal loan in the future. According to the January 2023 Senior Loan Officer Survey, lenders are pulling back on all types of loans to consumers with scores under 680.

The vast majority of personal loan balances are carried by consumers with good or very good credit scores (FICO® Scores from 670 to 799), according to Experian data. People with scores above 799 most likely have more inexpensive means to borrow sums under $50,000 (if they borrow at all). Those with credit scores under 670, if they receive an approved personal loan offer, will likely have a much higher interest rate than those with better scores, making the loan unaffordable or not worth the cost.

Average credit card interest rates are significantly higher than average personal loan rates, which explains why debt consolidation is one of the most popular reasons to obtain a personal loan. Moreover, personal loans are generally fixed-rate loans, and nearly all credit cards today have variable rates. This means credit card balances are likely to accrue more interest charges in the months ahead—potentially prompting more consumers to seek personal loans as a way to save money and streamline their debt.

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.

FICO® is a registered trademark of Fair Isaac Corporation in the U.S. and other countries.