Americans owe more than $2.9 trillion on their auto loans and credit cards alone, and the personal-finance company WalletHub today released its report on the States Where Consumers Are Adding the Most Debt to show where people are having the toughest time. WalletHub ranked the states where credit card, auto loan, and personal loan debt increased the most from Q3 2025 to Q4 2025 based on its proprietary data. This report comes on the heels of our recent analysis of the Household Debt Report.
| Largest Increase | Smallest Increase |
| 1. Maine | 41. Michigan |
| 2. Wyoming | 42. Kentucky |
| 3. Hawaii | 43. Ohio |
| 4. Montana | 44. New Hampshire |
| 5. Georgia | 45. Connecticut |
| 6. New Mexico | 46. Iowa |
| 7. North Dakota | 47. Missouri |
| 8. Florida | 48. Delaware |
| 9. Texas | 49. Oregon |
| 10. Vermont | 50. West Virginia |
For the full report, please visit:
https://wallethub.com/edu/
National Stats (Inflation Adjusted)
- Year-End Debt Results: Total household debt increased by $257 billion during 2025. That is 810% more than the increase in 2024.
- Household Average: The average household owed a total of $155,594 at the end of 2025, which is $11,639 below the all-time high.
- Total Debt-to-Deposits Ratio: The ratio of total household debt to deposits indicates consumers are in a stable position. It's still below pre-Covid levels and roughly 47% lower than the early-2000s peak.
- Total Debt-to-Assets: The ratio between total household debt and assets, at 9.28%, continues to be at a very healthy level.
For the full report, please visit:
https://wallethub.com/edu/d/
“At a time when interest rates are very high, it’s especially important to minimize the accumulation of debt. Americans have added a staggering amount of new debt in the past decade, and it can be very easy for that debt to become unsustainable, leading to future issues like default and major credit score damage.”
---
“Maine residents added the most debt than those in any other state, at least in percentage terms. The average credit card balance in Maine increased by 8% from Q3 2025 to Q4 2025 – by far the second-biggest increase in the country. The average Maine resident’s auto loan balance also increased by nearly 2%, and their average personal loan balance went up by around 0.5%, both of which were the third-biggest increases in the country. A number of states saw decreases in either the average auto loan balance or personal loan balance, so Maine’s increase in both is notable.”
- John Kiernan, WalletHub Editor
Expert Commentary
What are the main reasons why people add more debt?
“People add more debt for a mix of economic, situational, and behavioral reasons. The one driver is a cash-flow mismatch: insurance, childcare, the purchase of a new vehicle, and property or income tax payments may require annual, semi-annual, or quarterly payments that the individual doesn’t have sufficient resources to cover. They could also be taking advantage of discounts for paying in advance that exceed the interest that would be paid on the debt. Many households also have volatile or irregular income that makes monthly budgeting difficult. Debt also increases after unexpected shocks – medical bills, car repairs, family emergencies, job loss, or other disruptions – especially when savings are thin. Finally, easier access to credit, buy now pay later options, and lifestyle inflation can normalize financing everyday spending and push consumers toward borrowing as the default solution.”
Colin Slabach – Clinical Assistant Professor, New York University
“There are many reasons why people add more debt. The general main reason is because people want or need something they cannot afford…yet. The most famous example is a mortgage for buying property. Few people can pay cash for a house so loans are used and paid over time. This general concept of getting it now and paying for it later applies to all debt. The trouble with more debt occurs when the interest rates are too high and/or what we use debt to purchase does not provide a return. Whenever possible, use debt to pay for assets (degrees, houses, cars, major repairs), not expenses (shopping, vacations, bills).”
Raymond Kowalczyk – Professor, Illinois Central College
How can people minimize the accumulation of debt?
“To minimize debt accumulation, create a ‘rainy day fund.’ With every paycheck, put money in a special account for emergencies. I would recommend a goal of 6 months' salary in a high-interest savings account for optimal results. It’s important to leave that account only for emergencies.”
Dr. Sandra Poirier – Professor, Middle Tennessee State University
“Inflation has definitely caused prices to increase, and it seems like wages are a bit more stagnant than usual. Accumulating more debt feels inevitable. There are a few things people can do to try and minimize debt. The most important thing to do is to create a budget and a spending plan. With these, people can see their current financial position and also get an idea of where money is being spent. A popular saying is that knowing is half the battle. Once spending is known, cuts can be made in areas and the extra money saved can pay off debt. Also, try not to use your credit card if you know you can’t pay off the purchase in the next 60 days.”
Raymond Kowalczyk – Professor, Illinois Central College
How does unsustainable debt damage your credit score?
“Unsustainable debt can damage credit scores primarily through missed payments and elevated revolving utilization. Payment history is the most important factor in most scoring models, so late payments, collections, charge-offs, and bankruptcies can result in large score declines and remain on reports for an extended period of time. High credit card utilization – especially when balances remain near limits – can also depress scores because it signals stress and reduces perceived borrowing capacity. When consumers are under strain, they often apply for more credit, which can lead to more inquiries and shorten average account age, further weighing on scores. Lenders may also respond by reducing credit limits or closing accounts, which can raise utilization even if the borrower’s spending remains unchanged. Even when a credit score does not fall immediately, high debt burdens can still reduce approvals and increase borrowing costs because lenders evaluate overall affordability in addition to the score.”
Colin Slabach – Clinical Assistant Professor, New York University
“If you don’t pay your loans, you will get a negative mark on your credit score. Remember, unpaid federal student loans will also impact your credit score in a negative manner. Also, too much credit utilization can impact your credit score negatively.”
Dr. Sandra Poirier – Professor, Middle Tennessee State University
More From WalletHub
No comments:
Post a Comment