• Rising auto, credit card, and student loan delinquencies signal growing financial strain among U.S. households
• Younger and lower-income Americans are falling behind fastest as inflation and high rates erode budgets
• Total household debt now exceeds $18 trillion, raising fears consumers are losing control of their finances
After years of relative calm, American borrowers are slipping behind on their debts at the fastest pace in over a decade — a sign that consumers may be losing control of their finances as living expenses and borrowing costs remain stubbornly high.
Household debt climbed to a record $18.4 trillion in the second quarter of 2025, according to the Federal Reserve Bank of New York, while the nation’s gross federal debt hit $38 trillion for the first time. The figures highlight mounting strain across every layer of the U.S. economy — from Washington’s balance sheet to families’ credit card bills.
While most borrowers are still keeping up, delinquencies are rising sharply. Auto loans, credit cards, and student debt are driving the increase, even as mortgage delinquencies — traditionally the biggest category of household debt — remain historically low.
Borrowers falling behind across credit lines
Auto loans are among the hardest-hit, with about 5% of borrowers 90 days or more past due, up roughly 12% from a year earlier, according to LendingTree.
Credit card trouble is spreading quickly too: nearly 12% of balances are 90 days delinquent, the highest level since before the pandemic, Federal Reserve data show.
Student debt has reemerged as a flashpoint since federal loan payments resumed after a three-year pause. More than one in ten borrowers are already behind, the New York Fed reports, with millions seeing their credit scores tumble.
“These trends suggest that household finances are fraying at the edges,” said one Federal Reserve economist. “We’re not seeing panic yet, but the pressure is clearly building.”
Young and low-income borrowers hit hardest
The financial pain isn’t distributed evenly. Gen Z and millennial borrowers are missing payments at far higher rates than older generations — with car-loan delinquencies exceeding 7% among younger drivers compared with about 4% for Gen X.
Geographically, the South is showing the greatest distress. Mississippi, Louisiana, and Georgia now lead the nation in auto-loan delinquencies, with nearly one in ten borrowers behind on payments.
Credit card delinquencies are rising across all income levels, but the gap is widening: in the lowest-income neighborhoods, more than 22% of cardholders are delinquent, versus about 8% in affluent ZIP codes, according to the St. Louis Fed.
Economists warn of “slow-moving” debt stress
Experts stress that this is not yet a replay of the 2008 crisis. Households still spend about 11% of disposable income on debt payments — manageable by historical standards. But analysts warn that the trend is turning dangerous, particularly for borrowers with variable-rate or subprime debt.
“We’re watching a slow bleed,” said analysts at VantageScore. “Consumers are stretching to keep up, but higher rates and prices are eating away at their margin of safety.”
If inflation remains elevated and the Federal Reserve keeps interest rates high, economists warn delinquencies could keep climbing — and the weakest households could fall further behind.
“The story isn’t collapse,” said a senior researcher at the New York Fed. “It’s erosion — a gradual loss of financial control that’s spreading from the margins inward.”