PLANO, Texas—After years of high borrowing costs and stubborn inflation that have strained household budgets, new delinquency data across major consumer credit categories paint a mixed but more resilient picture of the U.S. economy, with credit-card delinquencies easing even as stress builds in auto loans and mortgages.
Credit card balances remain elevated at about $1.23 trillion, roughly one-quarter of the nation’s $5.09 trillion in total household debt, yet delinquency rates are moving lower despite average interest rates hovering above 20%, pointed out Brian Turner, president and chief economist at Meridian Economics.
The overall credit-card delinquency rate slipped to 2.98% at the end of September, down from a recent peak of 3.22% in June 2024, according to Federal Reserve data, even as markets increasingly expect the Fed to resume cutting rates in the coming weeks, Turner said.
“Lower interest rates appear to be on the horizon, with the Federal Reserve likely to resume its easing cycle next week,” said Turner. “This will obviously benefit the wealthiest cohorts by further boosting asset prices, but it should also help all borrowers by reducing debt servicing costs to some degree.”
Auto loan delinquency reached 3.88% in the third quarter, Turner noted.
“This is about 1.5-times higher than in mid-2021 during the COVID and the highest level since the year after the Great Recession. This indicates that many borrowers are being pushed to the brink of financial collapse with budget being eaten up by car payments,” Turner said.
Brian Turner
Car Payments Skyrocket
Turner emphasized that financing a car has gotten very expensive with average monthly payments jumping nearly 40% between 2020 and 2025, rising from $470 to about $660.
“Higher vehicle prices and sharply higher interest rates are what pushed payments up. In November, the average price of a new vehicle was $49,766, only slightly below September’s record high,” he explained.
Finally, mortgage delinquency increased in the third quarter of 2025.
“The delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 3.99% of all loans outstanding at the end of the third quarter of 2025,” Turner said. “The delinquency rate was up six basis points from the second quarter of 2025 and up seven basis points from one year ago. The percentage of loans on which foreclosure actions were started in the third quarter rose by 3 basis points to 0.20%.”
The five states with the largest quarterly increases in their overall delinquency rate were: Arizona (29 basis points), Louisiana (28 basis points), Indiana (28 basis points), Iowa (26 basis points), and Texas (24 basis points). Since this time last year, the FHA seriously delinquent rate increased by almost 50 basis points. In contrast, the conventional and VA seriously delinquent rates remained relatively flat.