The recent surge in consumer financial distress is likely to continue into 2025.
Information from the Federal Reserve Bank of New York’s Center for Microeconomic Data shows that total household debt increased by $147 billion in the third quarter of 2024 to $17.94 trillion. Credit card debt alone increased by $24 billion to $1.17 trillion.
That data is supported by a recent report issued by the National Foundation for Credit Counseling or NFCC, a nonprofit financial counseling organization.
The NFCC’s Financial Stress Forecast, which comes from information from individuals seeking credit counseling, is a strong indicator of financial stress levels throughout the country, Mike Croxson CEO of NFCC said in a statement.
“With debt levels at record highs, we are not surprised to see that our Debt Burden Scale has consumers moving rapidly toward dangerous levels of financial strain,” Croxson said.
Measuring consumer financial health in stages, the third quarter NFCC Financial Stress Forecast reached 5.6, a 99.3 percent jump since its lowest of 3.9 in 2021.
He said analysts project that by the end of the year, many more consumers will reach the Debt Burden Scale’s Stage 6, a “Tightening the Belt” stage in which consumers may cut back on food and personal savings to make ends meet.
“This is an alarming trend with millions of Americans unable to keep up with increasingly unmanageable debt,” said Croxson.
He said nonprofit credit counseling can provide the support consumers need to navigate debt challenges.
To find a credit counselor in your area, go to https://www.nfcc.org/.
“We encourage anyone who is feeling overwhelmed by debt to seek help from our certified counselors now,” Croxson said.
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