The Fed reports that while delinquency rates for non-mortgage debt have mostly leveled off, auto and credit card balances increased in the final quarter of 2025.
02/16/2026 1:00 P.M.
Data At a Glance:
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Credit card balances grew by $44 billion in the fourth quarter of 2025 to reach $128 trillion.
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Nonhousing balances show the most signs of consumers’ financial strain.
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The rate of student loan borrowers falling 90+ days behind on payments is increasing.
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New data from the Federal Reserve Bank of New York reveals an increase in consumer credit stress as student loan and credit card delinquencies lead to an upward trend in total indebtedness.
Total U.S. household debt climbed to $18.8 trillion in the fourth quarter of 2025, a $191 billion increase from the previous quarter, according to the Federal Reserve Bank of New York’s Quarterly Report on Household Debt and Credit (PDF). The 1% rise in balances comes as the aggregate delinquency rate reached 4.8% — the highest level in nearly a decade.
While mortgage balances continue to drive the bulk of the growth, rising by $98 billion to a total of $13.17 trillion, the most acute signs of consumer strain are appearing in nonhousing categories. Credit card balances grew by $44 billion during the quarter to reach $1.28 trillion, a 5.5% increase over the previous year. Auto loan balances also edged higher by $12 billion, totaling $1.67 trillion.
The most striking shift in the fourth quarter occurred in the student loan sector. The New York Fed reports that 9.6% of student loan balances are now 90+ days delinquent. This figure reflects the ongoing friction from the resumption of payment reporting after pandemic-era forbearance periods. Approximately 1 million borrowers who were more than 120 days past due saw their loans transferred to the U.S. Department of Education’s Default Resolution Group during this period.
The transition rate into serious delinquency for student loans reached a staggering 16.2%, a sharp contrast to the 0.7% seen just one year prior.
Wilbert van der Klaauw, an economic research advisor at the New York Fed noted in a press release on the household finance findings, that while mortgage delinquencies are still near historically normal levels, the deterioration is not uniform across the country. He said that the fraying of the credit market is “concentrated in lower-income areas and in areas with declining home prices.”
This geographic and demographic divide suggests a K-shaped financial reality. Consumers in higher credit tiers often maintain stability through assets like real estate and stocks, while those on the lower-income spectrum use credit to manage the cost of living.
Data from the report indicates that the median credit score for new auto loans dropped slightly from 724 to 716, while the 10th percentile for new mortgage originations declined from 660 to 650.
Despite rising debt and delinquency, the report found that the percentage of consumers with a third-party collection account on their credit reports declined slightly to 4.6% from 4.9% in the previous quarter. This could indicate a lag between delinquency and the placement of accounts with agencies, or a shift in how creditors handle late-stage debt before it enters the collection cycle.
“We would characterize overall that delinquency rates have, especially for non-mortgage debt, that they’ve really stabilized or leveled off,” a New York Fed researcher said last week, as reported by Reuters.
ACA’s Take
This data serves as a macro-level early warning system. For professionals in financial services and debt collection, these figures could provide a roadmap for where to allocate resources, and how to focus communications with struggling borrowers.
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