U.S. Consumer Debt Hits $17.8 Trillion as Delinquency Risk Builds Below the Surface

Debt among U.S. consumers stood at $17.8 trillion in May 2025, according to Equifax‘s latest credit trends report. That’s a 2.1% year-over-year jump, which brought non-mortgage debt to $4.63 trillion.

Some gauges appear healthy — including average utilization of credit and reductions in bank card delinquencies. But on closer inspection, the picture shows weaknesses in the foundation.

Auto and credit card debt are climbing, and younger customers are carrying most of it. For nonprime-market lenders, that means handling growth amid increasing default risk. Even when rates are stabilizing, high balances and shifting behavior are creating an underwriting challenge.

This story isn’t just about data points. It’s about where stress is rising in the subprime market, which borrowers are tipping into higher risk, and where lenders need to step in — not just to avoid mispricing, but to avoid missing out.

Bank Card Delinquencies: Calm or Storm Ahead?

Outstanding bank card balances increased 4.4% year to year to $1.06 trillion, and the number of active accounts increased 5.4% to nearly 580 million. Delinquency rates on their surface appear healthier: The 60-days-or-more delinquency rate dropped from 2.94% to 2.81% in May.

But velocity and volume are essential. More accounts and more outstanding debt can compound even modest shifts in performance. A 13 basis-point decline in hard delinquency can mask potential stress in certain subprime categories where tolerance to economic shocks is thin.

That means segment-level tracking that does not depend on blanket averages for lenders. Credit card delinquencies among Gen Z have nearly doubled since the pandemic, while millennials also show rising stress, Equifax’s generational snapshot concluded.

Most of those consumers have high outstanding balances, low savings rates, and unconventional income sources.

Auto Loans Roll Higher — with Delinquency

Outstanding auto loan and lease balances grew 1.9% year over year to $1.67 trillion. Total accounts grew modestly too, to 87.1 million, showing continued consumer reliance on financing even at high auto costs.

But delinquency is creeping up. Serious balance auto delinquency was 1.41%, two basis points higher than in May 2024. It’s more than seasonality noise. It’s a sign of deteriorating affordability, most prominently in the subprime segment.

While stressed consumers have to choose between a car note or a bill to a creditor, auto financiers need crisp, forward-looking instruments to differentiate transitory friction and long-term risk.

With leasing portfolios still performing well but financial pressure rising elsewhere, lenders may rely more on risk modeling to catch early signs of borrower distress.  

Utilization Levels Off, But Friction Increases Below

Average bank card utilization fell slightly from 21.1% to 20.7% in May — a slight decline that suggests consumers are keeping revolving debt in check. But that’s a figure that obfuscates large differences depending on age, income, and geography.

Younger consumers are facing climbing delinquencies and less access to financial products.

Equifax statistics show that younger consumers, especially Gen Z, have lower “ability to pay” ratings than their pre-pandemic criteria. Their delinquencies are climbing, and they are increasingly relying on unsecured credit because inflation outstrips wage growth.

That puts pressure on lenders to reevaluate how they assess risk. Standard scoring systems will frequently overlook income variability, gig work, or inconsistent payment history. Portfolio managers who don’t disaggregate borrower behavior will face unexpected losses.

What This Means for Subprime-Focused Lenders

Surface-level stability in national metrics may also entice lenders to scale their businesses aggressively. But the Equifax data reminds us that debt stress is not one-size-fits-all.

Subprime lenders, in particular, need finer tools to perceive micro-trends, including changes in delinquency by credit band, geographic changes, and thin-file or near-prime consumer behavior.

Product design will also have an impact. Offering lines of credit with flexible payment terms, changing limits, or graduated rates will afford access to underserved segments without overexposure of the portfolio. That’s also true if lenders underwrite strategies that employ real-time income or expense data to more effectively assess capacity.

Ultimately, those who are looking to grow in this climate will need to have a sense of when they are facing fleeting disruption versus deeper structural risk. Equifax’s report does more than relay numbers — it outlines a road map to wiser decisions.

As competition returns and consumers reach for service debt, profitability will accrue to those who read beyond averages and read fault lines instead.