Americans are carrying more debt than ever before. According to the Federal Reserve Bank of New York’s Q2 2025 Household Debt and Credit Report, total household debt reached $18.4 trillion. That works out to about $138,000 per household and nearly $70,000 per adult, on average.
However, not all debt is created equal. Some types of borrowing can build stability and long-term wealth, while others weigh heavily on household budgets and make planning for a secure future more difficult.
1. Mortgages remain the heavyweight
Mortgage balances climbed to $12.9 trillion, nearly 70% of all household debt. Many borrowers still benefit from low rates secured before interest rates rose sharply, which helps limit financial stress. Even so, rising balances reflect the ongoing demand for housing, as well as the reality that homes are more expensive than in the past.
A mortgage is often the largest debt a family will take on, but it is also one of the most productive. Owning a home can create equity and provide long-term financial stability, turning debt into an asset rather than just an obligation.
2. Credit card debt keeps climbing
Credit-card balances hit $1.21 trillion in the second quarter of 2025, up $27 billion in three months. Unlike mortgages, which often help build wealth, credit card debt is a significant burden because it attracts some of the highest interest rates in consumer finance. With average rates above 20%, balances that are not paid off quickly can grow faster than many households can manage.
The increase in balances reflects the squeeze from everyday living costs. Even with inflation slowing, essentials like groceries, energy, and insurance remain high. Many households are leaning on credit cards to bridge the gap, but delinquencies are creeping upward as borrowers fall behind.
3. Auto loans add up
Americans owe $1.66 trillion on auto loans. The cost of new and used vehicles remains elevated, prompting lenders to extend repayment terms to six or seven years to make monthly payments more affordable.
Cars are often necessary, but unlike homes, they lose value quickly. Debt tied to vehicles provides convenience and mobility, but it does not generate future wealth. For households already balancing mortgages and credit cards, car loans add another weight to the financial load.
4. Student loans under pressure
Student loan balances stand at about $1.65 trillion. With repayment back after the pandemic pause, millions of borrowers are once again facing monthly bills. Roughly 10% of student debt is already seriously delinquent, with younger borrowers hit hardest as they juggle lower incomes and rising living costs.
Education debt can still be worthwhile if it leads to higher lifetime earnings, but repayment struggles show how uneven the payoff can be. For many households, student loans feel less like an investment in the future and more like a permanent budget strain.
5. Home equity lines of credit on the rise
Balances on home equity lines of credit, or HELOCs, have grown for 13 consecutive quarters, now totaling about $411 billion. These loans allow homeowners to tap into equity for renovations, tuition, or everyday expenses.
HELOCs can be flexible and relatively low-cost compared with other borrowing, but they also increase the risk of foreclosure if payments are missed.
6. Other debt in the mix
The Fed also tracks a smaller category of “other debt,” which includes retail cards, personal loans, and consumer finance products. Together, they total roughly $540 billion.
While smaller in scale, these forms of debt often carry high interest rates and short repayment terms, making them some of the most difficult for households to manage.
What it means for households
Altogether, about 4.4% of household debt is now delinquent, according to the New York Fed. That share remains low compared with past downturns, but it is edging up. Rising borrowing costs and stubbornly high living expenses mean more households are struggling to keep up.
Debt is not automatically harmful. Used carefully, it can provide access to education, homeownership, or financial breathing room. Problems arise when balances grow faster than incomes or when high-interest credit becomes the fallback for covering everyday bills. The most effective approach is to keep productive debt under control and limit borrowing that only creates additional costs.
Practical steps include:
- Reviewing budgets regularly to spot potential savings. Even trimming small recurring costs, like unused subscriptions, can free up extra cash for debt payments.
- Paying down high-interest balances, such as credit cards, first. If you have more than $10,000 in unsecured debt, you might want to consider getting professional help. National Debt Relief is a trusted source for free advice and assistance.
- Consolidating or refinancing when it lowers costs. Alternatively, a reverse mortgage can turn home equity into tax-free cash for seniors 62+, with no house sale required, and no monthly payments. Use the funds for medical bills, home repairs, or even that dream vacation.
- Choosing vehicles and loans that fit both needs and budgets. You could save up to $2,000 on your car loan with My Auto Loan, which pits four lenders against each other with just one application. Apply now for the possibility of better financing in as little as 24 hours.
- Exploring income-driven repayment plans for student loans. You could also think about easy ways to earn more income. This company's members take surveys in their free time and collectively earn up to $55,000 daily.
- Building an emergency fund to reduce reliance on credit. When life takes an unexpected turn, having a cash buffer makes it easier to stay on track. SoFi Checking is offering 4.50% APY with a $300 bonus for direct deposit. (May change without notice.)
- Borrow for future investments, not shortfalls. If you have at least $100,000 in investments, check out a free service called SmartAsset. You fill out a short questionnaire and instantly get matched with up to three vetted financial advisors in your area.
Handled with care, debt can support progress toward education, housing, and security while helping families avoid being trapped by high-cost borrowing.
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