Household debt has reached a staggering $18.6 trillion, marking a new record in the last quarter. While most borrowers seem to be managing their payments, younger Americans, in particular, are feeling significant pressure.
According to the Federal Reserve Bank of New York, about 3% of outstanding debt balances were 90 days or more overdue in the third quarter—the largest increase for a quarter since 2014. Alarmingly, for those aged 18 to 29, the figure is closer to 5%, more than double the rate from last year and the highest of any age group.
This financial strain is largely attributed to delays in student loan payments, which have collectively hit a record of $1.65 trillion in total debt.
Total household debt as of Q3 2025 was categorized as follows:
- Mortgage debt: $13.07 trillion
- Auto debt: $1.66 trillion
- Student debt: $1.65 trillion
- Credit card debt: $1.23 trillion
- Miscellaneous: $0.55 trillion
- Home equity line of credit: $0.42 trillion
The New York Fed’s researchers noted an increase in delinquency rates, but they pointed out that most types of debt, including auto loans and mortgages, have remained stable.
Dong-Hoon Lee, an economic research advisor at the New York Fed, commented that low mortgage delinquency rates indicate the housing market’s strength, buoyed by solid housing equity and stringent lending practices.
Overall, delinquent debts accounted for 4.5% of outstanding totals last quarter, the highest level since early 2020. However, this number aligns with pre-pandemic trends and is far less than the 11% seen back in 2009.
These findings indicate that while Americans are taking on more debt, they’re not significantly falling behind on payments.
Ted Rothman from Bankrate noted that the debt-to-income ratio for households is currently lower than it was from the late 1990s to the late 2010s. He mentioned that, despite an uptick in cases over the last five years, the situation isn’t overly concerning.
The widening gulf between the haves and have-nots
Although delinquency rates aren’t spiking, signals are emerging that the economy is becoming increasingly divided. Some borrowers are thriving while others are barely getting by.
This situation mirrors a K-shaped recovery, where higher-income groups continue to build wealth and spend, whereas lower-income families are experiencing heightened financial challenges.
A recent report indicates that the top 10% of U.S. households now account for nearly half of consumer spending. Companies in sectors from airlines to hospitality are reporting that premium offerings are driving their growth.
This divide is also reflected in consumer finance, as the share of high-risk subprime borrowers has surged to levels unseen since 2019. At the same time, the number of superprime borrowers—those with excellent credit—has increased as well.
Michele Ranelli from TransUnion noted that as consumers gravitate toward the extremes of credit risk, it’s expected that the usage of credit cards and auto loans will grow faster within these categories.
Last quarter, average credit card debt per borrower climbed to $6,523, with nearly 175 million individuals carrying balances.
Federal Reserve Chairman Jerome Powell recently recognized this economic disparity, citing anecdotal evidence of suffering among lower-income consumers while those at the upper end of the spectrum continue to spend.
He remarked, “We think there’s something there,” alluding to the evolving K-shaped economic landscape.
