Americans are experiencing increasing financial stress as delinquencies on credit cards and auto loans have surpassed pre-pandemic levels and are the highest they have been in over a decade. The U.S. household debt reached a new high of $17.5 trillion in the fourth quarter of 2024, up 1.2% from the previous three months. This increase in debt balances is attributed to population growth, an increase in online spending, rising car costs, and driving consumer activity. Americans are also dealing with high inflation and interest rates that are making debt more costly.
Younger and lower-income households are experiencing the most financial stress, with high levels of default on credit card and auto loan balances. Delinquency rates remain low overall, mostly due to the strong performance of mortgage and student loans. However, researchers are keeping a close eye on the situation as higher financial stress is expected, especially among adults aged 30 to 39. While student loan default rates may be the lowest on record, the resumption of payments has contributed to the increase in financial stress.
The future of debt in America remains uncertain, with the first quarter figures to be reported soon. Historically, first-quarter figures show a decrease in debt, particularly credit card debt, but a stable first quarter in 2023 was seen as a bad omen for the year’s debt trends. The upcoming first-quarter numbers will provide insight into how much worse the debt situation could get.
With increasing financial stress and uncertain future debt trends, many Americans may face difficulties going forward. Researchers and experts are closely watching the ongoing situation to gauge how bad the debt burden might become.