Household Debt Is On The Rise

The New York Federal Reserve’s report on household debt for the second quarter of 2025 came out Tuesday. And the numbers are big. Some of them, like delinquencies, also may be a bit alarming.

Here are the basic line items: Total household debt increased 1% from the previous quarter, to $18.4 trillion. Debt balances increased on credit cards, auto loans, mortgages, home-equity loans, and student loans.

Loan delinquency rates remained “elevated,” according to the report, at 4.4% of outstanding debt overall, with student loan delinquencies spiking sharply higher, into double-digits.

Generally speaking, consumers borrowing more is a good thing, said Ted Rossman, a senior industry analyst at Bankrate. He said it usually means consumers are spending more.

“Overall consumer debt, it’s a staggering $18.4 trillion. Credit card balances rose —they’re very close to a record high. And some of that is economic growth, population growth, more card usage, less cash,” he said.

Rossman doesn’t see a lot that’s alarming in the report.

“The household debt-to-income ratio is still pretty low on a historical basis. Credit card and auto loan delinquencies are a little bit elevated, but banks aren’t too worried,” he said.

But a lot of borrowers are worried, said Chip Lupo at personal finance site WalletHub. It found in a recent survey of consumers that 48% of American households struggle with credit card debt. “Folks are depending more and more to supplement their income, using it for everyday expenses,” he said.

Lupo said this doesn’t mean these consumers are in deep trouble, yet.

“When we say ‘struggling’ that doesn’t necessarily mean delinquent or in default. It means that you’re scraping just to keep up the minimum payments,” he said.

And for the nearly half of cardholders who don’t pay off their balance every month, Bankrate’s Ted Rossman said the financial hole just keeps getting deeper.

“They’re facing very high interest rates. The average is around 20%. Most of them have been in debt for more than a year,” he said.

Student loan debt is another red flag for Rossman. After a pandemic pause, borrowers had to start paying again in 2023. But missed payments only started being reported to credit agencies this year.

“We’re really just starting to see the big rise in serious delinquencies and defaults on student loans,” he said.

People who are in debt trouble tend to prioritize making their monthly mortgage and auto payments first — to keep their house or car — before they focus on getting current with their student loans.