As household debt hits a record high of $18.59 trillion, Americans owe more than ever before. Here's how to manage yours

America has a debt problem, and it appears to be getting worse.

According to the latest data from the Federal Reserve Bank of New York, the total debt burden for American households reached a record of $18.59 trillion in Q3 2025, an increase of $197 billion from the previous quarter (1).​

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Mortgages remained the largest slice of this total burden at $13.07 trillion, or roughly 70% of all household debt. After that, auto loans reached $1.66 trillion, student loans totaled $1.65 trillion, and credit card balances stood at $1.23 trillion.​

With such a high national debt figure, it’s getting harder to find Americans who aren’t paying off a loan these days. Debt.org recently found that 90% of Americans carry some form of debt (2). Meanwhile, the average cumulative debt amount for an American is now roughly $104,755, according to Experian (3).​

On the face of it, all of these stats really don’t paint a pretty picture of American purchasing power. And while there’s a lot to cringe at in this new report, there are also a few nuances to factor into the equation.

What’s really behind America’s $18.59 trillion debt

Even though mortgages are the main driver of debt, the rise in credit card debt and student loans are arguably more worrying.

For starters, mortgage delinquencies are stabilizing at a low rate (4). That leads the Fed to believe balance sheets at many American homes remain relatively robust even as debt climbs.

Secondly, the combination of high student loan debt and credit card payments suggests younger and lower-income borrowers are struggling the most in this economy. The current delinquency rate for student loans is 9.4 %, which is up from 7.8% in Q1 of 2025.

​Granted, federal student‑loan payments were paused during the pandemic, and some missed payments during that time weren’t reported to credit bureaus until recently. Even though this recent spike in student-loan delinquencies is eye-catching, there’s a reporting lag that slightly skews the results.​

Still, the combination of higher delinquency rates in student loans and rising credit card debt signals to serious stress points, strongly supporting the idea of a “K-shaped economy.”

More economists today use the “K-shaped” analogy to illustrate the post-pandemic environment where the rich seem to get richer and the poor get poorer. Today’s top 20% can manage rising costs more easily thanks to appreciating real estate, plus the stock market boom, while the bottom 80% may have to dip into savings or even take on debt just to get by.

With these rising debt figures, it’s understandable why more average Americans are feeling the squeeze.

Read More: Are you richer than you think? 5 clear signs you’re punching way above the average American

Practical ways to break free from debt

No matter your debt situation, a little extra planning and discipline can go a long way to getting rid of the burden.

First, you need to get a clear look at your cash flow. Consider downloading a money management app and linking it to all of your accounts to visualize income, savings and obligations. As you start to get a better sense of your finances, you can build an actionable debt payment plan.

One of the most common models to consider for debt repayments is the “avalanche method,” where you prioritize paying off higher-interest, unsecured debt like credit card balances. Even small additional payments here can significantly reduce interest and accelerate your payoff timeline.

For debts with longer, lower interest rates, strive to keep up with the payments. While it’s ideal to make extra payments here too, falling behind is the biggest risk, as it carries serious consequences (for example, a weaker credit score).

For student loans, keep in mind that federal borrowers can switch to an income-driven repayment plan that caps monthly payments based on income and family size. Taking advantage of this opportunity could free up cash flow while maintaining good standing on your loans.

Anyone with private loans could also consider refinancing to a lower rate, but only if it won’t compromise important federal protections.

Although focusing on debt payments should take precedence, it’s equally important to squeeze savings into this strategy, especially if those savings can be put into an emergency fund.

Yes, it might feel counterintuitive to save while owing money, but even a small cushion can prevent compounding debt for unexpected expenses. Think about it: without the safety net of an emergency fund, just one medical bill can undo months of progress.

The more clarity and consistency you have over your finances, the more confident you’ll feel about turning a debt-free dream into a reality.

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Article sources

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

Federal Reserve Bank of New York (1, 4); Debt.org (2); Experian (3)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.