The Truth About America’s Debt Crisis
ByTammi Huang
UpdatedSep 5, 2025
- The average American has about $16,000 in credit card debt.
- Increasing credit card balances means you are spending more than you earn. This is not sustainable.
- Debt relief may be an option for those who cannot afford to pay off their credit cards.
It’s no secret that the United States is a country that runs on debt. Stagnant wages, higher cost of living, and the inability to pay off what we owe keeps more and more people stuck in the red. What used to be a common headache has quickly grown into a larger financial epidemic.
According to the Federal Reserve, Americans now collectively carry more than $1 trillion in revolving debt. It’s a startling milestone, but the problem is only getting worse. Here’s what’s happening in the American debt crisis.
Where is the money going?
To take a deeper look, the average U.S. household has over $16,000 in credit card debt. Families increasingly rely on credit cards just to cover daily expenses, and approximately 10 percent of their income is used to pay non-mortgage debts.
This is worrisome because many people barely have enough money to pay for basic necessities. So, when unexpected financial hardships arise, they’re forced to dig themselves into even deeper debt, worsening the American debt crisis even further.
It’s a harsh cycle, but what’s more alarming is the fact that so many people who are struggling with debt only make minimum payments on their accounts.
Put your money to better use
If you aren’t paying your credit cards in full each month, you could be wasting far more money than you realize. All of the money you’re paying on interest could go towards building a stronger financial future instead.
Needless to say, only making minimum payments isn’t an effective or cost-friendly way to deal with debt. You could easily spend decades trying to pay off your credit cards and still not be able to clear it off.
So, what’s the solution?
While it may seem impossible to get rid of heavy credit card debt, there is a smarter way out. Here at Freedom Debt Relief, we’ve created a program that helps people solve their debt problems; and it doesn’t involve a debt consolidation loan, so good credit isn’t required.
If you’re part of the American debt crisis and are struggling with debt or worried about falling behind on payments, it might be time to take action. Freedom Debt Relief is here to help you understand your options for dealing with your debt, including our debt relief program. Our Certified Debt Consultants can help you find a solution that will put you on the path to a better financial future. Find out if you qualify today.
Learn More
How to Get Out of Credit Card Debt (Freedom Debt Relief)
U.S. Credit Card Debt Hits All-Time High, and Overdue Payments Rise for Young People (NPR)
U.S. Household Debt in Four Charts (Reuters)
Debt relief stats and trends
We looked at a sample of data from Freedom Debt Relief of people seeking a debt relief program during August 2025. The data uncovers various trends and statistics about people seeking debt help.
Debt relief seekers: A quick look at credit cards and FICO scores
Credit card usage varies significantly across different age groups, reflecting diverse financial needs and habits.
In August 2025, the average FICO score for people seeking debt relief programs was 600.
Here's a snapshot by age group among debt relief seekers:
| Age group | Average FICO 9 credit score | Average Credit Utilization |
|---|---|---|
| 18-25 | 582 | 80% |
| 26-35 | 590 | 76% |
| 35-50 | 594 | 75% |
| 51-65 | 601 | 72% |
| Over 65 | 615 | 67% |
| All | 600 | 73% |
Use this data to evaluate your own credit habits, set financial goals, and ensure a balanced approach to managing credit throughout your life.
Personal loan balances – average debt by selected states
Personal loans are one type of installment loans. Generally you borrow at a fixed rate with a fixed monthly payment.
In August 2025, 44% of the debt relief seekers had a personal loan. The average personal loan was $10,718, and the average monthly payment was $362.
Here's a quick look at the top five states by average personal loan balance.
| State | % with personal loan | Avg personal loan balance | Average personal loan original amount | Avg personal loan monthly payment |
|---|---|---|---|---|
| Massachusetts | 42% | $14,653 | $21,431 | $474 |
| Connecticut | 44% | $13,546 | $21,163 | $475 |
| New York | 37% | $13,499 | $20,464 | $447 |
| New Hampshire | 49% | $13,206 | $18,625 | $410 |
| Minnesota | 44% | $12,944 | $18,836 | $470 |
Personal loans are an important financial tool. You can use them for debt consolidation. You can also use them to make large purchases, do home improvements, or for other purposes.
Manage Your Finances Better
Understanding your debt situation is crucial. It could be high credit use, many tradelines, or a low FICO score. The right debt relief can help you manage your money. Begin your journey to financial stability by taking the first step.
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Author Information
Written by
Tammi Huang
Tammi Huang is a Marketing Manager at Freedom Debt Relief. Her goal is to help people adopt better money habits and improve their financial health. She wholeheartedly believes that spending less doesn’t mean living less. When she’s not writing, Tammi fills her free time working on home design projects, trying new restaurants, and exploring dog-friendly spots with her rescue pup.
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