A new analysis by The Century Foundation and Protect Borrowers examined how debt payments are affecting American households’ financial situations. The study found that between late 2022 and early 2026, the typical U.S. household’s real take-home monthly pay increased by $109 when adjusted for inflation. However, during the same period, monthly debt payments rose by $57 per worker.
The research indicates that for single-income households, approximately 52 cents of every dollar gained in income over recent years goes toward higher debt payments. For dual-income households, the analysis projects that income gains are entirely consumed by increased debt obligations, with payments potentially exceeding new earnings. The study examined credit records for millions of working-age Americans between ages 25 and 64, analyzing payments on credit cards, auto loans, student loans, and home equity lines of credit, though it excluded mortgages and certain other forms of borrowing.
Inflation-adjusted debt payments increased by nearly 15% over the roughly three-year period, rising at a rate approximately eight times faster than household income growth, which expanded by less than 2%. According to Angela Hanks, chief of policy programs at The Century Foundation, the findings may understate actual financial pressures facing households, as the analysis does not include mortgage payments or installment loans such as buy now, pay later arrangements and payday loans.
Additional data from the Federal Reserve’s Survey of Consumer Finances supports these findings. The survey found that 8.6% of families spent more than 40% of their income on debt payments in 2025, compared to 6.5% in 2022, representing levels not observed since 2013. Experts note that while some debt like mortgages and student loans may contribute to wealth building, extended repayment terms and larger borrowing amounts can create financial strain for households.
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