Debt countries: which countries have the biggest problem with debt?

By:

James Knight

James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.

Updated: Oct 13, 2022

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Virtually all of us will at one time or another rack up some level of debt. This is a perfectly normal part of managing your finances, with debt being used to fund everything from higher education to get your foot on the property ladder. We also use debt for smaller purchases ranging from using a credit card for the weekly shop or buying expensive items such as cars on finance.

There is nothing inherently wrong with accruing some level of manageable debt. In fact, being able to repay a lender regularly and on time proves that you are responsible with your finances, and will increase your credit score which makes taking out larger loans, such as a mortgage, much easier.

However, it can be very easy to allow debts to build up over time, with many small transactions and borrowings adding up to an unmanageable sum, while high-interest rates from many short-term lenders can add to the pressure of holding large amounts of debt.

With inflation rates soaring across the world, reaching a 40-year high in the UK, people will find managing their debt more difficult than ever before. At Invezz, we are most often focused on helping our customers to find the best trading platforms and stock apps. However, we are also concerned with the wider financial climate and, with this in mind, we have carried out a data-led research project to reveal which countries have the biggest problems with mounting debt. 

The countries with the most debt

Having looked at a range of debt-related factors for our sample of OECD countries, we decided to pool the results into a single score that will reveal the countries with the biggest debt problems. Here’s how they stack up when all factors are considered.

1. Canada

Overall Debt Score: 8.42/10

Canada has the biggest overall debt problems, with a combined debt score of 8.42 out of 10, having appeared in the top 10 countries for each factor we looked at while also topping the table for credit card ownership.

2. United Kingdom

Overall Debt Score: 7.92/10

In second place is the United Kingdom with an overall debt score of 7.92. The UK has the most debt-conscious population, with the most searches per 100,000 people for debt and credit-related terms. The UK also made the top 10 for government debt, placing tenth, as well for credit card ownership, for which it placed seventh.

3. United States

Overall Debt Score: 7.75/10

In third place is the United States, having received an overall debt score of 7.75. Similarly to the UK, the USA placed in the top 10 for debt and credit-related searches, government debt, and credit card ownership, though it didn’t take first place in any individual category.

The countries with the highest levels of credit card ownership

Here we can see which countries have the highest levels of credit card ownership, giving their population instant access to credit and normalising household debt.

1. Canada

Credit Card Ownership: 82.74%

Canada has the highest rate of credit card ownership in the OECD at 82.74%, meaning fewer than 1 in 5 Canadians don’t own one. 

2. Japan

Credit Card Ownership: 69.66%

Japan has the second highest level of credit card ownership at 69.66%, meaning more than two-thirds of Japanese adults own one.

3. Switzerland

Credit Card Ownership: 69.21%

Switzerland places third with 69.21% of people owning a credit card, which is just a fraction less than second-place Japan.

The countries with the highest levels of household debt

In this section, we can see which countries have the highest levels of household debt compared to the average household disposable income. By comparing debt against income, we can see which countries have the biggest affordability problem with mounting household debts.

1. Norway

Household Debt, % of disposable income: 246.30%

Norway has the highest proportional household debt at 246.30% of household disposable income. This means that people in Norway owe almost two and a half times the amount of money they have available for general household expenditures.

2. Denmark

Household Debt, % of disposable income: 244.11%

In second place is Denmark, another Scandinavian country with very high household debt as a percentage of household disposable income at 244.11%, which is only a fraction lower than first place Norway.

3. Netherlands

Household Debt, % of disposable income: 228.20%

Taking third place is another Northern European country, the Netherlands, suggesting that Northern Europe, in particular, has a widespread problem with levels of household debt. In the Netherlands, household debt is still more than twice the amount of household disposable income at 228.20%.

The countries with the largest debt-to-GDP ratio

Here we change our focus to government debt, comparing it to the GDP of different OECD countries to see which have the biggest relative deficits.

1. Japan

Government debt, % of GDP: 236.1%

Japan has the highest level of government debt compared to the country’s GDP at 236.1%. This means that the country owes more than two and a half times the amount of money that it generates annually, which is by far the highest rate of any country in our study.

2. Greece

Government debt, % of GDP: 185.1%

Greece has the second highest level of government debt as a percentage of GDP, standing at 185.1%. The Greek government debt crisis made headlines throughout much of the 2010s as the country grappled with the aftermath of the global financial crisis. This resulted in the biggest recession in history.

3. Italy

Government debt, % of GDP: 134.1%

In third place, with government debt at 134.1% of GDP, is Italy. While Italy is one of four Mediterranean states to make the top ten, suggesting that regional factors may be a large part of why Italy’s debts are so high, the country has also seen a large increase in government debt due to the Covid-19 pandemic, of which Italy was one of the most affected countries in Europe resulting in the some of the most severe lockdown restrictions being imposed.

The most debt-conscious countries in the world

People’s online behaviour and search history can reveal the issues that are most on their minds. Here we look at how many searches were made for several debt-related terms in each country compared to their population. This should highlight which countries are most engaged with the world of credit and debt.

1. United Kingdom

Searches per 100,000: 2385.47

The country that searches the most for debt and credit-related terms is the United Kingdom, where there are 2,385.47 searches per 100,000 people. This indicates that people in the UK are the most engaged with the world of debt, either by seeking new lines of credit or looking for help with managing their financial situation. 

The UK had the highest number of searches per head for each debt-related search term we analysed. With 122.19 searches for “borrow money” per 100,000 people, as well as 2219.05 for “credit card” per 100,000. As these search rates are actually almost double that of the second place United States, it seems that people in the UK are much more comfortable taking out new debts than in other countries. 

However, the UK also has by far the highest number of searches for “debt advice” per head at 44.23 per 100,000 people, with the second highest rate being just 6.23 per 100,000 in Luxembourg. This suggests that people in the UK also find themselves in need of financial and debt-management advice than in any other country.

2. United States

Searches per 100,000: 1445.57

The United States is the country with the second highest number of searches for debt-related terms at 1,445.57 searches per 100,000 people. While having the second highest number of searches per head makes the United States one of the most debt-conscious countries, there are almost 1,000 fewer searches per person than in the UK.

The United States has the second highest search rates for “borrow money” and “credit card” with 77.09 and 1367.96 searches per 100,000 respectively. However, the USA saw only 0.52 searches per 100,000 for “debt advice”, suggesting that Americans need less assistance with managing their debts.

3. Australia

Searches per 100,000: 1165.99

Australia takes third place with 1,165.99 searches per 100,000 people. This means that while there is no discernible geographical correlation between the top countries for debt-related searches, all three are Western anglophone nations with developed economies.

Similarly to the USA, Australia recorded the third highest search rates for both “borrow money” and “credit card”, with 67.90 and 1097.10 searches per 100,000 respectively. However, Australians appear to be a little less comfortable with their debts as the search rate for “debt advice” in the country is almost twice that of the USA at 1.00 searches per 100,000.

Methodology

We wanted to find out which countries had the biggest problems with debt. To do this, we looked at several different debt-related factors which could be looked at individually, as well as pooled together to form an overall picture of each country’s relationship with debt.

We used World Bank data to assess rates of credit card ownership in different OECD countries. We then looked at household debt as a percentage of disposable income, using data from the OECD data for both factors.

This was followed by an overview of government debt in each country, which again used OECD data for government debt levels and used World Population Review data for each country’s GDP.

The final factor we looked at was Google search data, recording the number of searches for debt-related terms “borrow money”, “credit card” and “debt advice” in each country over the last 12 months. We then calculated the number of searches per 100,000 people using population data from World Population Review to form our ranking.

Lastly, we combined all factors into an equally-weighted score out of 10 to reveal the countries with the biggest overall debt problems.