For years, economists marveled at the resilience of the American consumer. Even as interest rates surged, inflation eroded purchasing power, and savings dwindled, spending held firm and debt payments were made on time. That resilience is now showing unmistakable signs of strain.

The Federal Reserve Bank of New York's January 2026 Survey of Consumer Expectations contains a data point that should alarm anyone watching the economy: 15.3% of respondents said they expect to miss a minimum debt payment in the coming three months. That is the highest reading since April 2020, when the pandemic was shuttering businesses across the country and unemployment was spiking toward 15%.

The comparison to April 2020 is instructive—and not because today's economy resembles the pandemic crisis. Back then, the spike in expected delinquencies was driven by a sudden, external shock. Today, the stress is chronic. It has been building slowly as the cumulative weight of higher borrowing costs, elevated consumer prices, and stagnant real wage growth for lower-income households has ground down financial cushions that were once robust.

Who Is Falling Behind

The New York Fed data reveals a deeply uneven picture. The delinquency expectations are concentrated among three groups:

  • People over 60: Older Americans are seeing their fixed incomes squeezed by healthcare costs, insurance premiums, and a Social Security cost-of-living adjustment that has not kept pace with the actual costs they face.
  • Those without college degrees: Workers without a four-year degree are disproportionately employed in industries where wage growth has lagged inflation, including retail, hospitality, and manufacturing.
  • Households earning under $50,000: Low-income families have largely exhausted the pandemic-era savings that once provided a buffer, and are increasingly reliant on credit cards to cover essential expenses.

The aggregate numbers confirm the stress. Total household debt in the United States reached $18.59 trillion as of the third quarter of 2025, up $197 billion from the previous quarter, according to the New York Fed's Household Debt and Credit Report. Credit card balances have climbed to record levels, and the average credit card interest rate remains above 20%, even after the Federal Reserve's three rate cuts in late 2025.

"What we're seeing is not a sudden crisis but a slow erosion. Consumers have been running on financial fumes for over a year, and the tank is finally hitting empty."

— Mark Zandi, Chief Economist, Moody's Analytics

The Student Loan Drag

Adding to the pressure is the student loan landscape. The New York Fed reports that 9.4% of aggregate student debt is now 90 or more days delinquent or in default, a rate that has remained elevated since the sharp rise in the first half of 2025 when repayment obligations fully resumed after years of pandemic-era pauses and court-ordered freezes.

The Biden-era income-driven repayment plans that were supposed to ease the burden have been partially unwound by the current administration and mired in legal challenges. For the roughly 43 million Americans with federal student loans, the uncertainty about their repayment terms adds a layer of financial stress that is difficult to quantify but impossible to ignore.

Bankruptcy Filings Are Climbing

The most visible manifestation of consumer stress is in the bankruptcy courts. Filing volumes have been rising steadily and are on track to surpass pre-pandemic levels in 2026. Chapter 7 filings—the most common form of consumer bankruptcy, in which debts are discharged but assets may be liquidated—are expected to dominate court dockets.

The drivers are varied but interconnected. "Buy now, pay later" services, which allowed consumers to spread purchases into installments, have created new debt obligations that do not always appear in traditional credit reports. Auto loan delinquencies are rising as consumers who purchased vehicles at inflated pandemic-era prices find themselves underwater on loans with high interest rates. And rising property taxes and homeowners' insurance costs are pushing some homeowners—particularly first-time buyers who stretched to afford a home—into financial distress.

Bankrate's Findings

Bankrate's 2026 Credit Card Debt Survey, conducted in December 2025 with a sample of 2,564 adults, found that among the 914 respondents carrying a credit card balance, a growing number reported struggling to make minimum payments despite never having missed one in the past. The survey highlights cases of consumers who maintained perfect payment records for years before the cumulative effect of higher rates and prices finally overwhelmed them.

What the Fed Sees—and What It Cannot Fix

The Federal Reserve's decision on Wednesday to hold interest rates at 3.5% to 3.75% provides no immediate relief for struggling borrowers. While rates are well below their 2024 peak, they remain high enough that credit card interest rates, auto loans, and other variable-rate consumer debt continue to impose heavy costs.

Chair Jerome Powell acknowledged during his press conference that the labor market "is not as robust as it was a few years ago," noting that hiring is at its weakest level since 2013. But the Fed's tools are blunt. Lower interest rates would eventually reduce borrowing costs, but the transmission mechanism is slow, and the most vulnerable consumers are often in debt that does not immediately reprice when the Fed cuts rates.

What Consumers Should Do Now

Financial advisors stress that consumers who feel the pressure building should act before they miss a payment, not after. Concrete steps include:

  • Call your creditors. Most credit card issuers and lenders have hardship programs that can temporarily reduce interest rates or minimum payments. These programs are far easier to access before a missed payment than after.
  • Prioritize high-interest debt. If you are carrying balances on multiple cards, focus payments on the highest-rate card first while making minimums on the rest. The "avalanche method" saves the most money over time.
  • Explore balance transfer options. Despite tighter credit conditions, many issuers are still offering 0% introductory APR balance transfer cards for borrowers with good credit. Transferring high-rate balances can provide breathing room.
  • Seek nonprofit credit counseling. Organizations like the National Foundation for Credit Counseling offer free or low-cost guidance to consumers struggling with debt. A certified counselor can help negotiate with creditors and develop a realistic repayment plan.
  • Avoid payday loans and high-cost alternatives. The temptation to use payday loans or other predatory lending products to make minimum payments is strong, but these products almost always make the situation worse.

The 15.3% figure in the New York Fed's survey is a warning, not a crisis—yet. But it reflects a reality that policymakers and financial institutions cannot afford to ignore: the American consumer, long the engine of global economic growth, is running on empty for a growing share of the population.