Our people are suffering under the weight of increasing economic hardship. Most have run through their pandemic-related savings and are at or near the credit card limit. U.S. households currently owe a mind-boggling $18.59 trillion in combined debt. This truly mind-blowing sum is turning the world of consumer credit upside down. Recent reports suggest that the consumer credit boom has come to a screeching halt this year. In fact, this trend could mean that a lot of Americans are maxing out their credit cards.
The most recent data indicates that revolving debt, which is largely comprised of credit card balances, shrank by 5.5 percent in August. It returned with a small $5.4 billion gain in October, resulting in a 4.9 percent annual growth rate. Non-revolving credit, such as loans for cars and education, increased by only $3.7 billion. In real dollars, this amounts to a small increase of just 1.2 percent. Credit growth had already hit a wall. This scary trend is symptomatic of a time when the average American can’t get credit the same way they once did.
In the second quarter of this year, seriously delinquent student loans exceeded 10.2 percent. By the end of the third quarter, the rate of transitions into serious delinquency had risen even further to 14.3 percent. Debt flow into serious delinquency more than doubled to 3.03 percent, climbing from 1.68 percent only one year prior. This sudden spike is a testament to the increasing struggles that borrowers are experiencing today.
The data show that millions of households are increasingly turning to credit cards to make ends meet. This push has increased credit card debt, which has been terribly slowing down over the past few months. According to recent numbers, total consumer debt has hit an all-time high of $5.08 trillion. In October, consumer debt increased at a weaker-than-expected annual rate of only 2.2 percent.
Yet the economic divide continues to widen, becoming more glaring by the day. America’s wealthiest quintile now accounts for almost two thirds of all consumption. This elite group, especially the upper 3.3 percent, has made a dramatic jump in their spending. When adjusted for inflation, spending among the bottom 80 percent has flatlined.
“The top 20 percent now account for nearly two-thirds of all consumption. The top 3.3 percent have increased spending the most. Spending has stagnated, adjusting for inflation, among the bottom 80 percent.” – KPMG
This financial pressure on the average American household has been intensified with the rapid increase in interest rates. Credit cards reached an average APR of 19.83 percent in April. Other companies are asking for permission to charge rates that reach as high as 28 percent. By now, these elevated rates are causing it to be more difficult than ever for consumers to manage their debts in a healthy way.
Inquiries regarding bankruptcy and foreclosure matters, too, have skyrocketed as legal aid has been forced to respond to these economic stressors. As reported by LegalShield, “The index has now increased for seven consecutive months, up 8.2 percent in 2025, signaling continued financial strain among American households.” Yet this growing trend highlights the dire financial straits most Americans now find themselves in. They are all in dire financial straits facing crushing debt and declining incomes.
The effects of these trends are deep and wide, rippling beyond the borrowers directly affected to the rest of the economy. Consumers are now trying to adapt their financial game plans to meet these impossible burdens. This transition increases the likelihood of defaults and bankruptcies in the near future.