Every Country in the World Ranked by Average Personal Debt

Ezra Cabrera | April 4, 2022


    Debt can be a paralyzing force in anyone’s life. It can keep you from pursuing your dreams or accomplishing your goals. And when it comes to personal debt, some countries are definitely better off than others.

    In this blog post, we’ll take a look at the countries with the highest and lowest average personal debts. So, if you’re curious about where your country stacks up, keep reading!

    Disclaimer: These figures do not necessarily represent each individual’s debt. These are averages only.

    Average Personal Debt by Country (Arranged from Highest to Lowest)

    The data below shows how each country fares when it comes to household or personal debts in the year 2020. The data is from the Organization for Economic Co-Operative and Development (OECD)

    The average personal debt in each country is represented as the percentage of the annual disposable income of each country. The OECD defines disposable income as “income available to households such as wages and salaries, income from self-employment and unincorporated enterprises, income from pensions and other social benefits, and income from financial investments (less payments of tax, social insurance contributions and interest on financial liabilities).” 

    The list is arranged from the country with the highest average personal debt to the country with the lowest personal debt. 

    table country

    What does this mean?

    Suppose you live in Denmark, and you earn $80,000 a year. Based on the table, Denmark has an annual disposable income of 256%. That means the average household debt in Denmark is $204,800.

    Again, the figures above are just the average personal debts. It doesn’t necessarily mean that each person in Denmark has $204,800 in debt.

    While the figures may seem high, it’s worth noting that the total debt already includes balances from auto loans, property loans, mortgages, credit cards, student loans, and more. Expensive cities may also contribute to the high personal debt average in some countries. In Denmark’s case, its capital, Copenhagen, was listed as the 25th most expensive city in the world, which may have influenced its high personal debt percentage.

    What is the Effect of Increasing Personal Debt in the Country?

    According to the International Monetary Fund (IMF), increasing debts can have a short-term boost and a long-term drag on a country’s economy. The increasing personal debt encourages individuals to spend more on different things, including houses, vehicles, and other commodities. As a result, the demand for products increases, promoting job openings. 

    However, after three to five years, IMF’s study found that individuals start cutting back on expenses to make way for debt repayments. This causes an increase in unemployment, a decline in demand, and an overall drag on growth.

    Fortunately, the financial sectors in every country can do something to help lower the country’s personal debt. Actions such as lowering down payments on mortgages or offering flexible payment solutions for loans may help the citizens reduce their debts.

    To Summarize

    Based on the table, the top three countries with the higher household or personal debt based on a portion of their annual disposable income are Denmark, Norway, and the Netherlands. High debts may be influenced by many factors, including the cost of living, mortgage, property loans, auto loans, credit cards, and more.

    Debt can have a positive short-term effect on a country’s economy. But note that debts are meant to be repaid and when it’s time to pay up, people may have to cut back on their expenses to meet their financial obligations. The government sector of the countries can take action towards lowering the country’s overall personal debt by strengthening policies and regulations that support the lowering of down payments for necessities such as homes, vehicles, and other necessities.

    Every person in the world owes (or has owed) money at some point. Whether you're looking to move to a new country or simply curious about global debt trends, the list above can be a useful guide in knowing how each country fares when it comes to personal debts.

    Every Country in the World Ranked by Average Personal Debt

    About the Author

    Ezra Neiel Cabrera has a bachelor’s degree in Business Administration with a major in Entrepreneurial Marketing. Over the last 3 years, she has been writing business-centric articles to help small business owners grow and expand. Ezra mainly writes for SMB Compass, but you can find some of her work in All Business, Small Biz Daily, LaunchHouse, Marketing2Business, and Clutch, among others. When she’s not writing, you’ll find her in bed eating cookies and binge-watching Netflix.