Debt distress spreading to wealthier Americans
More affluent consumers are falling behind on debt payments
It’s not just the working poor who are having trouble paying their debts. A new report from the National Foundation for Credit Counseling finds that higher wage earners are beginning to fall behind in their credit card and other payments.
“Financial strain is the new normal for American households,” the report said, an early-warning signal that is likely to cause banks to raise their lending standards and, in many cases, to increase their interest rates to compensate for the higher risk of loans becoming delinquent.
The NFCC is an association of non-profit credit counseling agencies. Using data from its member agencies, it compiles a quarterly Financial Stress Forecast, and the latest edition of that forecast remains at a record high, finding Americans having “sustained difficulties” managing unsecured debt, primarily credit cards.
“The NFCC Financial Stress Forecast remains steady at its record-high,” said NFCC CEO Mike Croxson. “This is a critical signal that financial strain has become the new normal for U.S. households, and the market must take this bellwether seriously.”
A companion statistic, the Consumer Debt Score (CDS), which reflects people’s ability to repay unsecured debt, has climbed above the 50-point threshold (meaning more consumers are struggling to meet obligations than not), and has stayed elevated across multiple quarters.
Since 2024 Q2, the CDS has been consistently above 50 for four straight quarters. Prior to 2024 Q2, this was not the case since the 2019 Q4 score of 49.
The overall trend has changed dramatically: The CDS showed a period of stability from 2018 Q1 through 2020 Q1 (9 quarters), yet since 2024 Q2, there has been a huge increase in just five quarters.
“As a bellwether that acts as an early indicator of future financial metrics, the elevated FSF reading serves as a critical warning for the lending industry,” the report cautioned. “The NFCC FSF predicts that this severe consumer distress will translate directly into higher U.S. commercial bank delinquencies in the quarters ahead, forecasting the U.S. Delinquency Rate will hit 3% in 2025 Q3.”
More income, more debt
It’s generally thought that people who make more money don’t have as much debt as their poorer counterparts. But that’s not necessarily true, especially now.
The NFCC report finds that the average client seeking help from credit-counseling agencies across the country now makes about $70,000 a year, with unsecured debt levels approaching $35,000, or half their annual income, according to the NFCC.
Before the pandemic, the typical client enrolled in counseling made about $40,000 a year and carried $10,000 in unsecured debt, or roughly 25% of their annual income.
Consumers who made more than $70,000 or so generally relied on debt for what are called discretionary items — vacations, gadgets and non-essentials. But today, thanks to rising debt-to-income levels, financial stress is weighing on higher-income families as well as lower-income groups.
“We are seeing a disturbing shift from discretionary debt to survival debt,” said Mike Croxson, chief executive of the NFCC in a Wall Street Journal report.
More evidence of debt distress
The NFCC report echoes a quarterly data report from the Federal Reserve Bank of New York. It found that total household debt rose to about $18.8 trillion in Q4 2025, with significant increases in credit card, auto loan, and student loan balances.
Delinquencies (past-due payments) increased: total debt delinquency rose to 4.8%, with serious delinquencies (90+ days late) also climbing for mortgages, student loans, and credit cards — signaling sustained stress on consumer payments.
Credit card and auto loan delinquency rates, after falling during the pandemic, have rebounded and continued rising into 2025, the report noted.
There are also signs of trouble in the mortgage sector. Some 13% of people who took out Federal Housing Administration (FHA) mortgages aren’t current on their loans, an increase from a year earlier, according to a recent report.
Credit counselors say these figures may understate the economic fragility developing within many households.
Trouble ahead
Economists say that together, these multiple independent sources all point to increasing payment problems, particularly:
Credit card delinquencies rising
Higher balances and debt loads
More consumers struggling to make payments on time
Stress not limited to low-income consumers
“America more or less runs on credit, but where a lot of households found themselves in this predicament was because … wages were not keeping up with inflation, [forcing] more and more consumers [to] rely on their credit cards,” said Chip Lupo of WalletHub in a recent ABC-TV report.