Despite affordability issues, household debt is actually down, report shows

Considering the overall affordability crisis and high gas prices in particular, it's surprising that inflation-adjusted household debt actually fell during the first quarter of the year, according to WalletHub's inflation-adjusted analysis of the latest data from the Federal Reserve Bank of New York. Consumers actually paid off 351 percent more debt than they did during the first quarter of 2025.

Total household debt is now roughly $1.1 trillion below the record from 2008 when you adjust for inflation. In absolute terms, household debt was at a record high of $18.79 trillion at the end of Q1.

WalletHub also released a new, nationally representative survey gauging how households are dealing with debt. You can find key highlights below.

Key Findings (Inflation Adjusted)

• Q1 Results: Total household debt decreased by $339 billion during Q1 2026. That is 351% more than the decrease in Q1 2025.
  
• Household Average: The average household owed a total of $155,607 at the end of Q1 2026, which is $14,804 below the all-time high.
  
• Total Debt-to-Deposits Ratio: The ratio of total household debt to deposits indicates consumers are in good shape, as it's still below pre-Covid levels and roughly 48% lower than its early-2000s peak.
  
• Total Debt-to-Assets: The ratio between total household debt and assets, at 8.97%, continues to be at a very healthy level.

Full study: https://wallethub.com/edu/d/household-debt-report/120725

Household Debt Survey Results

• Fuel Costs Driving Debt: 56% of people say recent energy cost increases are leading to debt.
  
• Struggling to Stay Afloat: More than half of Americans say their household is struggling with debt.
  
• Bracing for More Debt: More than 2 in 5 people expect their household debt to increase in the next 12 months.
  
• More Than Financial Pain: 40% of Americans think their household debt is affecting their health.
  
• Budgeting to the Rescue: 67% of people think better budgeting will solve their debt problems.
  
• Fun Comes First: Nearly 1 in 5 Americans say they're not willing to sacrifice fun to get out of debt.

Full survey: https://wallethub.com/blog/household-debt-survey/142811


"Considering the overall affordability crisis and high gas prices in particular, some people might be surprised to learn that inflation-adjusted household debt actually fell during the first quarter of the year. Consumers even paid off 351% more debt than they did during the first quarter of 2025. But it's important to remember that the war in Iran didn't start until the end of the quarter, and some early indicators are pointing to tough times ahead. For example, 56% of people say recent energy cost increases are leading to debt, according to a new WalletHub survey, and more than 2 in 5 people expect their household debt to increase in the next 12 months. The best way to prepare for potentially stormy economic conditions is to budget, save, and pay off as much debt as possible now."

- John Kiernan, WalletHub Editor