A new analysis by The Century Foundation and Protect Borrowers reveals that debt payments are increasingly claiming a significant share of income growth for U.S. households. The research tracked real take-home pay changes from late 2022 to early 2026, finding that a typical household’s inflation-adjusted monthly wages rose by $109 during this period. However, monthly debt payments during the same timeframe increased by $57.
The implications for household finances are substantial. For single-income households, researchers estimate that 52 cents of every dollar gained in real income over recent years goes toward higher debt payments. For dual-income households, the analysis suggests that income gains are entirely consumed by debt service, with payments exceeding the increase in earnings. The study examined credit records for millions of working-age Americans between 25 and 64, analyzing payments on credit cards, auto loans, student loans, and home equity lines of credit.
The growth rate of debt payments significantly outpaced income growth over the roughly three-year period examined. Inflation-adjusted debt payments rose approximately 15 percent, compared with household income growth of less than 2 percent. Researchers noted their analysis may actually understate financial pressure on households, as the study excluded mortgage payments and certain types of borrowing such as buy now, pay later arrangements and medical payment plans.
Federal Reserve data corroborates mounting consumer strain. The Fed’s Survey of Consumer Finances found that 8.6 percent of families spent more than 40 percent of their income on debt payments in 2025, up from 6.5 percent in 2022. This represents a level not observed since 2013. Financial experts caution that even debt considered beneficial for wealth building, such as mortgages and student loans, can become burdensome when repayment periods extend significantly or when loan amounts exceed optimal levels.
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