Key Takeaways:
U.S. consumer debt climbed to a record $18.19 trillion in March, driven by a surge in subprime borrowers opening new bankcards and carrying higher balances to cover rising living costs, Equifax data showed Wednesday.
"We are seeing an expansion in the subprime market that underscores the widening gap of the K-shaped economy," Maria Urtubey, an advisor at Equifax, said. "For the lower economic tier, credit may have moved beyond a financial tool and may be becoming a necessity for managing the rising costs of living."
The number of new bankcard accounts rose 8.1 percent year-over-year in January, with subprime originations jumping 18.6 percent. Credit limits among subprime borrowers increased 37.6 percent compared with a year earlier. Outstanding bankcard balances totaled $1.085 trillion in March, up 3.9 percent from a year ago, while total consumer debt — including mortgages, auto loans and student loans — rose 2.8 percent year-over-year.
The rising reliance on credit among lower-income households signals potential strain on consumer spending, which accounts for roughly two-thirds of U.S. gross domestic product. If delinquencies accelerate, tighter lending standards could follow, reducing access to credit for the households that need it most and weighing on economic growth.
Student Loan Delinquencies Climb to 17%
While delinquency rates improved for most loan categories, student loans emerged as a growing trouble spot. The share of student debt 90 or more days past due reached 17.01 percent in March, marking the fourth consecutive monthly increase. The number of new student loan accounts declined more than 10 percent year-over-year, but the dollar amount originated still rose 4.7 percent, reflecting higher education costs.
"Historically, consumers have prioritized mortgage and auto payments over student loans," Urtubey said. "However, as stricter enforcement measures are restarted, we may begin to see disruption in this 'payment hierarchy,' potentially introducing stress into other credit categories."
Delinquency Trends Diverge Across Loan Types
Outside of student debt, most consumer credit indicators showed improvement. Unsecured personal loan delinquencies (60-plus days) fell to 3.18 percent in March from 3.49 percent a year earlier. Bankcard delinquencies edged down to 2.97 percent from 3.09 percent, and auto loan delinquencies slipped to 1.49 percent from 1.51 percent.
Yet write-off rates — a lagging indicator — rose in both bankcard and auto portfolios. Bankcard write-offs increased 0.9 basis points, while auto loan and lease write-offs climbed 27.5 basis points, suggesting lenders are recognizing losses from accounts that became delinquent months ago. Urtubey described the rising write-offs as "a necessary adjustment to bring risk levels back to a sustainable baseline."
The broader picture echoes findings from the Federal Reserve Bank of New York, which reported last week that total household debt reached $18.8 trillion in the first quarter. The New York Fed data showed 4.8 percent of outstanding debt at some stage of delinquency, a level the central bank described as "mostly steady." Mortgage balances — the largest component — rose to $13.2 trillion, while auto loan balances reached $1.7 trillion.
For the Federal Reserve, the divergence between improving near-term delinquencies and rising write-offs presents a mixed signal. Consumer resilience remains intact for most borrowers, but the growing reliance on credit among subprime households — combined with rising student loan stress — suggests vulnerabilities are building beneath the surface. The Equifax data follows a separate report from the New York Fed showing household debt servicing payments rose to 11.3 percent of disposable income in the fourth quarter of 2025, up from 9.1 percent at the start of 2021, though still below pre-pandemic levels.
This article is for informational purposes only and does not constitute investment advice.
