The State of Debt in America: Inflation — Not Overspending — is Fueling the Crisis

Nearly 70% of Americans say they’re in debt, with inflation as the number one culprit. 

But even though many can’t afford their groceries, utilities or medical care, a third of Americans blame themselves for being in debt, according to The Penny Hoarder’s 2026 State of Debt in America Report.

Among the key findings:

• One in three American households (37%) are managing at least $10,000 in non-mortgage debt. 
• The No. 1 reason Americans cite for being in debt is the rising cost of living/inflation (21%). The second most cited reason is that their income isn’t high enough to cover expenses (17%).
• Nearly 30% say rising housing costs have forced them to cut back on other essentials like food and health care.
• 24% of respondents had to charge groceries to a credit card in the past 12 months because they couldn’t afford to pay for them any other way. 14% say they’ve had to do the same to cover utilities.
• Nearly a third (32%) use Buy Now, Pay Later at least a few times a year to purchase essentials like groceries. For Gen Z (18-29), that number jumps to almost half (46%).
• 16% say they’ve delayed or avoided going to the emergency room or urgent care during an illness or injury because of concerns over medical costs or existing medical debt.
• More than 1 in 10 Americans (13%) anticipate never being debt-free in their lifetime (and that’s excluding their mortgage).

The Pollfish survey asked 1,000 U.S. adults about their debt, focusing on its sources, their feelings about it and how they manage. We’ll cover all these aspects of debt in America and offer some advice for how you can deal if you’re facing a similar situation. Here’s the state of debt in 2026.

Who’s in Debt — and Why 

Debt is a broad term that can refer to anything you owe money on, including credit card balances, student loans, medical bills and mortgages. Financial experts generally agree there’s such a thing as good debt, i.e., taking on lower-interest debt to pay for something that can build your wealth long term. Examples of this would be a house or college degree. However, even good debt can turn sour when consumers are struggling to keep up with payments amid rising household expenses. And that’s becoming the reality for many. 

Roughly two-thirds of Americans say they are in debt, and 21% cited inflation and rising cost of living in general as the main reasons, followed by 17% who say it’s because their income is not keeping up with expenses. In comparison, a much smaller percentage blamed credit card spending/lifestyle choices (8%) or poor money management (4%). That means factors mostly out of consumers’ control is what’s driving the debt dilemma. 

It’s a costly dilemma, too. Even though 28% of respondents said they don’t have any debt outside of their mortgage, one in three respondents said their household’s debt balance was north of $10,000. And for 5%, it topped $100,000.

America’s Debt Blame Game

Despite naming inflation and the cost of living as the top reasons for their debt, Americans blame themselves (35%) more than they do the economy or inflation (18%).

But the U.S. economy has been a roller coaster for the last five years as it’s emerged from the COVID-19 pandemic. Inflation ballooned, fueled by a number of factors including supply chain disruptions, increased demand, tariffs and political unrest worldwide. Meanwhile, wages initially rose post-pandemic but have since slowed amid slowed hiring and AI disruptions. It’s left Americans’ stagnant wages struggling to cover the rising cost of living, including this year’s gas price spikes due to the U.S. war in Iran. 

In other words, we can’t catch a break. 

And that means blaming yourself for your debt may be a bit misplaced. Going into debt to cover the basic costs of living is a survival mechanism, not a failure to manage your money responsibly.

The Emotional Toll of Debt

Debt weighs heavily on those dealing with it. When asked how their debt makes them feel, the top responses were stressed (29%) and anxious (16%).

All that stress and anxiety over debt can affect coping skills, interpersonal relationships and even physical health:

• 1 in 10 Americans say they’ve hidden the true amount of debt they have from family, and another 5% have hidden it from a partner or spouse.
• 12% have ignored calls or messages from creditors.
• 16% say they’ve lost sleep worrying about debt.

These responses align with the findings from The Penny Hoarder’s Financial Anxiety Barometer Report earlier this year, which found that Americans spend the equivalent of 96 days a year worrying about money.

At least some respondents chose a positive outlook on their situation, with 12% saying their debt motivated them to improve their finances.

Going Into Debt Just to Get By

An alarming trend in personal finance is how frequently consumers are using credit cards to pay for essential expenses. Many Americans aren’t doing this simply for the rewards or because their credit card was what they had on hand — without the credit card, they wouldn’t have been able to afford the purchase.

Survey respondents said that in the last year they leaned on credit cards to pay for:

• Groceries (24%)
• Transportation (14%)
• Utilities (14%)
• Medical care (13%) 

Even if those who are doing this plan to pay off that credit card statement when it’s due, it’s still a risk. That incoming paycheck may get eaten up by a higher-than-normal electric bill or an unexpected car repair. In fact, we asked respondents which bill they would skip first if they experienced financial strain, and the majority said credit card bill (35%), followed by medical bills (25%). So, even if the intention was to avoid carrying a balance, it might not be the result.    

Debt payments also are eating into consumers’ take-home pay, which doesn’t just make it harder to keep up with bills. A higher debt-to-income ratio can affect your ability to qualify for loans or secure a decent interest rate. For 32% of respondents, debt payments are taking up 10% to 25% of their paychecks and for 1 in 5, it’s 26% or more. 

Ultimately, even though frivolous spending can certainly get you into debt, for many, debt has been a necessity to cover essential living expenses.

BNPL and How Americans Are Coping

As essential costs continue to rise, more Americans are looking to Buy Now, Pay Later, our survey results show. These short-term loans, offered through services like Klarna and Afterpay, allow consumers to split the cost of purchases over time. The loans don’t require a hard credit check, and terms are usually four installments paid over eight weeks, with no interest. 

One in three Americans pay for essentials like groceries and household supplies with BNPL loans a couple times a year. For Gen Z, it’s almost half. It’s worth noting that about 20% of Gen Z say they don’t use credit cards at all, a likely driver of their higher use of BNPL loans.

In addition to BNPL loans, Americans have turned to the following strategies over the last year to handle their debt or expenses:

• 16% borrowed money from friends or family members.
• 14% started a side hustle to make additional money specifically to cover the expense or pay off debt.
• 9% opened a new credit card specifically to use a 0% APR balance transfer window.
• 9% have taken out a personal loan to pay off debt.

The Health Cost of Debt 

Nearly 1 in 5 Americans (19%) in households earning under $55K delayed or avoided the ER because of the cost. Among Americans of every income bracket, balancing health care vs. medical costs has led to some potentially dangerous trade-offs:

• 16% skipped a recommended medical test, treatment or follow-up appointment.
• 16% delayed or avoided going to the emergency room or urgent care during an illness/injury.
• 11% cut pills in half, skipped doses or declined to fill a prescription.

Putting off medical care can lead to more serious and costly consequences if an illness progresses or an injury doesn’t heal properly.

Housing, Cars and Fixed Costs 

Your mortgage and auto loan payments are referred to as fixed costs because they’re recurring payments that stay relatively the same. On the other hand, expenses like groceries, household items, gas and clothing can change month-to-month. Although rising prices at the pump and the store have been hot topics, steadily creeping fixed costs also are squeezing Americans’ budgets:

• Housing costs over the past 12 months increased significantly for 29% of Americans, forcing them to cut back on other essentials like food and health care. 
• Almost one third spend more than 30% of their total monthly take-home pay on their rent or mortgage payment alone.
• 32% of Americans say their monthly car payment causes at least some financial strain. 
• More than 1 in 5 (22%) households earning less than $55K have monthly vehicle payments of $500 or more — meaning at least 10% of their income goes toward vehicle payments.

Just how much these costs are affecting budgets varies among age groups. For Americans 45 and older, 46% say their housing costs are stable and manageable. Millennials are least likely to describe their housing costs as stable and manageable at 31%.

Will Americans Ever Be Debt-Free?

Americans’ sentiments on debt are a mixed bag — 13% of respondents say they anticipate never being debt-free. And nearly one in five households earning less than $55K think they won’t be debt-free in their lifetime. 

However, half of the respondents currently in debt said they anticipate being debt-free in the next 10 years or sooner, excluding their primary mortgage. And 26% say they’re already debt-free.

However, one concerning stat is the long-term effect that debt may have on Americans’ finances. Nearly a quarter (23%) of respondents said they’ve delayed saving for retirement because of their debt, and 14% said they delayed buying a home. Although paying off high-interest debt is recommended, setting a debt-free goal at the expense of saving and investing could hurt long-term potential for building wealth and a retirement nest egg.

What to Do If You’re Struggling With Debt 

For those dealing with debt, there isn’t a one-size-fits-all solution. Depending on the type of debt you have, your income and your personal circumstances, you may find one or more of these options helpful for pulling yourself out of debt: 

• If you don’t have one already, one of the best ways to start paying off debt is to create a budget. If you’re new to budgeting, use our step-by-step budgeting guide for beginners. 
• Not having enough income was the second most cited reason for being in debt. Getting a side hustle can be a way to bring in extra income to pay off your debt faster.
• Credit card debt is some of the most expensive debt to have. Our guide to paying off credit card debt breaks down payoff strategies and how to find the best one for you.
• Being in debt can be overwhelming. If you need additional help getting it under control, there are multiple options for debt relief. Some nonprofit organizations may offer credit counseling services while some debt relief companies may be able to help reduce the total amount owed for a fee. Understanding each type can help you choose the best one for you.
• Paying off high-interest debt is important, but so is saving. Starting an emergency fund is a good way to build a cushion to help you avoid going into debt over unexpected expenses. But only 37% of working Americans say they have an emergency fund, according to The Penny Hoarder’s State of Savings report. We have an entire guide for how to save money, whether it’s to pay off debt or to help you build wealth for the future.

The Penny Hoarder Senior Managing Editor Tiffany Wendeln Connors, Managing Editor Katie Sartoris and Senior Editor of Freelance Mackenzie Raetz are Certified Educators in Personal Finance.

Methodology 

The Penny Hoarder surveyed 1,000 U.S. adults in June 2026 using Pollfish, a mobile survey platform. Respondents opted in to participate and were informed the survey included questions related to debt. All participants provided consent. Results were post-stratified to align with the U.S. adult population by age, gender, region, and income. Except for a question about the largest debt category, responses in regards to student loans were excluded in the results because the survey was conducted before the new federal student loan plan took effect.