The Debt Black Hole keeps getting bigger.
Household debt grew modestly in the fourth quarter of 2025, ending the year at another record high.
According to the latest data from the New York Fed, household debt grew by $191 billion in Q4, a 1 percent increase. That pushed total household debt to $18.8 trillion.
Mortgage balances grew by $98 billion, topping out at $13.7 trillion by the end of December. There were $524 billion in newly originated mortgages reported in the fourth quarter.
Credit card spending slowed last as consumers near their limits; however, balances continue scale new highs. In Q4, Americans added another $44 billion to their credit card bills, driving total credit card indebtedness to a record $1.28 trillion.
Based on the monthly consumer debt reports by the Federal Reserve, Americans ran up the bulk of that new credit card debt paying for Christmas. After slowing most of the year, revolving debt suddenly spiked in December.
The double whammy of rising balances and interest rates exacerbates the credit card debt problem. The average annual percentage rate (APR) currently stands at 19.58 percent, with some companies still charging rates as high as 28 percent. The average is only slightly down from the record high of 20.79 percent set in August 2024, despite Fed rate cuts.
With credit card balances getting close to their upper limits, more Americans are tapping into their home equity. HELOC balances increased by $11.6 billion in the fourth quarter, rising to $434 billion. Meanwhile, HELOC limits rose by $25 billion, continuing an expansion that began in 2022.
Auto loan balances increased by $12 billion last quarter, rising to $1.67 trillion after holding steady in Q3.
Student loan balances rose by $11 billion to $1.66 trillion.
As debt levels rise, more people are struggling to pay the bill. According to the New York Fed, aggregate delinquencies worsened in the fourth quarter. Currently, 4.8 percent of all debt is in some stage of delinquency.
Transitions into early delinquency increased for mortgages and student loans. Transition into delinquency was steady for other debt types.
Transitions into serious delinquency ticked up for credit card balances, mortgages, and student loans while auto loans and HELOC decreased slightly.
Student loan debt has the highest delinquency rate, with 9.6 percent of balances 90+ days overdue. According to the New York Fed, approximately 1 million student loan borrowers who were more than 120 days past due had their loans transferred to the U.S Department of Education’s Default Resolution Group.
Mortgage delinquencies are also on the rise, but haven’t reached a critical level. According to a NY Fed analyst, “Delinquency rates for mortgages are near historically normal levels, but the deterioration is concentrated in lower-income areas and in areas with declining home prices.”
Household debt has been growing steadily since the COVID era.
As the government showered Americans with stimulus during the pandemic years, many households paid down debt and boosted savings. However, as inflation spiked, Americans blew through their savings and turned to credit cards to make ends meet. The slowdown in debt accumulation could signal that consumers are nearly tapped out. This doesn’t bode well for an economy that depends on people buying stuff to continue limping along.
And even if consumers still have some borrowing power, an economy run on Visa and Mastercard simply isn't sustainable. When Americans finally hit their credit limit, it will have major implications for economic growth.
Meanwhile, the growing Debt Black Hole is warping the entire global economy. It is pressuring central banks to initiate easier monetary policy even with elevated levels of inflation. And if the debt bubble pops, it could spark another 2008-like crisis.
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