A joint analysis by The Century Foundation and Protect Borrowers reveals that American households are dedicating an increasing portion of their wage growth to debt service. The research examined credit records for millions of working-age Americans between 25 and 64, comparing income changes and debt payment trends from late 2022 to early 2026.
According to the findings, the typical U.S. household’s inflation-adjusted take-home monthly pay increased by $109 during the period studied. However, monthly debt payments rose by $57 over the same timeframe. For single-earner households, this means approximately 52 cents of every new dollar earned goes toward higher debt payments. For dual-earner households, researchers project that income gains are entirely consumed by debt obligations and then some. The analysis covered various debt categories including credit cards, auto loans and leases, student loans, and home equity lines of credit, though it excluded mortgages and certain other borrowing arrangements.
The data demonstrates that inflation-adjusted debt payments increased nearly 15 percent over the roughly three-year period, roughly eight times faster than household income growth, which expanded less than 2 percent. Policy experts suggest these figures may underestimate the actual financial pressure households experience, as the analysis excludes mortgage payments and various installment loan products not recorded in standard credit files. Federal Reserve data corroborates this strain, with 8.6 percent of families spending more than 40 percent of income on debt payments in 2025, up from 6.5 percent in 2022.
Financial analysts caution that even debt considered potentially beneficial—such as education or home loans—can create hardship when extended over lengthy repayment periods or taken in larger amounts than necessary. Consumer finance experts recommend evaluating total borrowing costs, repayment terms, and existing savings before incurring additional debt obligations.
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