Squeezed by inflation, more Americans are falling behind on their debts

Rising U.S. prices are squeezing household budgets, causing more Americans to fall behind on their debt payments, recent financial data shows.

The share of seriously delinquent auto loan balances has hit a record high this year, while nearly 13% of credit card balances are seriously past due — close to their 2010 peak in the aftermath of the housing crisis — according to recent data from the Federal Reserve Bank of New York. 

The share of households behind on their mortgages reached a six-year high, although the measure remains far below its peak during the Great Recession. 

Student loan delinquencies have also jumped in the past year, with the rise tied to the end of pandemic-era protections and a Biden administration repayment plan.

Other signs that more Americans are struggling with debt: 

• Almost 9% of U.S. households spent more than 40% of their income on debt repayment in 2025, the highest level since 2010, according to the Federal Reserve's Survey of Consumer Finances.
• Nearly 20% of households were late on a debt payment in 2025, a jump from about 12% in 2022, the same survey found.
• More Americans over 70 are struggling with debt, with their share of auto loan accounts in delinquency at its highest level since the New York Fed began tracking the metric in 2000. Credit card delinquency among people over 70 is at its highest level since 2011, the analysis also found. 

More than half of Americans relied on credit cards to pay for basic needs like groceries, rent and utilities, according to a March survey from Debt.com. Almost six in 10 said inflation was causing them to carry a bigger credit card balance than a year earlier, the same survey found. 

Many Americans are frustrated with the U.S. economy, even as measures such as GDP growth and unemployment remain relatively solid. After five years of elevated inflation, nine in 10 Americans say prices are the most important factor shaping their economic outlook, according to a recent CBS News poll.

The worsening debt situation reflects the impact of inflation on household finances, said Kelly Regan, a certified financial planner at financial advisory firm Girard. 

Credit cards are "kind of like the safety valve if you have no emergency savings left," Regan told CBS News. "We have an issue that if prices are increasing, especially more than people's wage growth, we're going to have a gap where things are going to cost more. And if you don't have any savings or are able to find those savings somehow in your budget, you're going to accrue debt."

Lagging wage growth

Adding to the crunch is that wage growth is lagging inflation, meaning that millions of households have lost purchasing power. That's also depressing consumer sentiment and squeezing people coping with higher prices, according to economists. 

More than half of U.S. consumers said they intend to cut back on spending in the next year, the University of Michigan Surveys of Consumers said in a report last week. The most common items they intended to cut back on included food and groceries, household items, cars, dining out, and vacations, the poll found. 

"Frustration over cost of living continues to mount, as consumers across the political spectrum believe that the trajectory of the economy has weakened since the beginning of the year," Joanne Hsu, the director of the Surveys of Consumers, said in a statement.