Total household debt rose to $19.1 trillion in the third quarter, with credit card balances alone reaching a record $1.29 trillion, according to data from the Federal Reserve Bank of New York. An estimated $220 billion in medical debt exists across the country, though this figure often remains obscured when consumers use credit cards or other borrowing to cover medical expenses. Experts describe this phenomenon as “shadow debt,” wherein medical bills effectively transform into credit card debt or other forms of consumer debt once paid through alternative mechanisms.
Research indicates that medical expenses drive a significant portion of consumer debt. According to a nonprofit credit counseling organization, 20% of its debt and budget counseling clients in 2025 cited medical hardship as the reason they incurred debt. A separate study from the Consumer Financial Protection Bureau found that about 17% of households surveyed in 2024 reported still owing money on loans or credit cards used to pay medical bills. Among households with medical debt currently in collections, the median amount owed is $1,492 based on data from credit bureau records.
One contributing factor to medical debt accumulation involves high-deductible health insurance plans. Consumers with such plans often face substantial out-of-pocket costs despite having insurance coverage. Additionally, nonprofit hospitals are sometimes offering medical credit cards to consumers before presenting available financial assistance programs, which many nonprofit facilities are legally required to maintain.
Experts recommend that consumers review medical bills for errors and duplicate charges before taking on debt. They also advise asking providers about available assistance programs and negotiating bills directly rather than immediately resorting to high-interest credit cards. Consumer advocates note that many nonprofit hospitals fail to adequately promote their financial assistance plans to patients who might qualify for support.
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