Rising living costs, elevated interest rates and stagnant paycheck growth are pushing more Americans deeper into debt — while major banks report historic profits.

NEW YORK — Serious credit card delinquencies in the United States have climbed to their highest levels in more than a decade, approaching depths last seen in the aftermath of the 2008 financial crisis, according to the latest Quarterly Report on Household Debt and Credit released May 13 by the Federal Reserve Bank of New York. Total U.S. household debt now stands at $18.8 trillion — including roughly $1.25 trillion in credit card balances, nearly $1.7 trillion in auto loans, and more than $13 trillion in mortgage debt — as American families increasingly turn to high-interest borrowing simply to keep up with everyday expenses.

For millions of Americans, the financial pressure no longer feels temporary.

It feels permanent.

The paycheck arrives, but the money disappears faster than it used to. Rent is higher. Insurance is higher. Utility bills are higher. Car repairs cost more. Groceries cost more. Dining out costs more. Interest rates exploded. Nearly every part of normal life became more expensive over the past several years, and for most working families, income has not kept pace.

That strain is now showing up across the U.S. financial system. But economists say the deeper issue is not simply how much Americans owe. It is why so many households increasingly need debt just to maintain basic financial stability.

For years after the pandemic, inflation reset the cost structure of everyday American life. While inflation has slowed from its peak, prices across much of the economy never returned to previous levels. Instead, the higher costs became permanent. Families adapted the only way they could. They delayed paying down balances. They financed more purchases. They relied more heavily on credit cards to bridge the growing gap between monthly income and monthly expenses.

A report released this month by debt-management firm Achieve found that 53% of consumers now carry credit card balances to cover essential expenses — not luxuries or vacations, but groceries, gas, utilities and rent. “For many households, higher balances are less a sign of economic optimism and more a sign that wages and savings are struggling to keep pace with essential expenses like groceries, utilities and housing,” said Austin Kilgore, analyst for the Achieve Center for Consumer Insights.

The cost of carrying that debt has never been more punishing. Average credit card interest rates now sit above 22%, according to Federal Reserve data — the highest level in modern American history. Cardholders who can no longer pay off balances in full each month are paying enormous amounts in interest while making little dent in the principal.

For lower-income families, the math has stopped working.

Mark Zandi, chief economist at Moody’s Analytics, told Fortune that lower-income households are “hanging on by their fingertips financially.” Zandi warned that many families are still spending because they remain employed, but the situation is becoming increasingly fragile as hiring slows and inflation continues eating into disposable income.

The strain is showing up unevenly across the country.

Wilbert van der Klaauw, Economic Research Advisor at the New York Fed, said the deterioration is becoming increasingly concentrated in financially vulnerable communities. “Delinquency rates for mortgages are near historically normal levels, but the deterioration is concentrated in lower-income areas and in areas with declining home prices,” van der Klaauw said in the Fed’s quarterly release.

Daniel Mangrum, the New York Fed research economist overseeing the report, said the broader consumer picture remains pressured even as some debt categories stabilized temporarily. “Aggregate household debt levels rose slightly, with modest increases in most debt types offsetting a seasonal decline in credit card balances,” Mangrum said. “Delinquency transition rates were mostly steady, while student loan delinquencies are returning to pre-pandemic levels.”

Even Americans who remain employed and current on most bills increasingly describe the same feeling: they are working hard, paying their obligations, and falling behind anyway.

While American families struggle, the institutions lending them money are reporting some of the strongest profits in years.

JPMorgan Chase, Capital One Financial, Citigroup, Bank of America and American Express all posted robust quarterly earnings fueled in part by elevated lending margins and higher interest income across consumer credit businesses. The wider the gap between what banks pay for capital and what they charge American borrowers, the more profitable the credit card business becomes — and that gap has rarely been wider than it is today.

The imbalance is now fueling growing bipartisan frustration in Washington.

Senator Bernie Sanders of Vermont, who introduced legislation alongside Missouri Republican Senator Josh Hawley to cap credit card interest rates at 10%, accused major financial institutions of exploiting struggling consumers.

“When large financial institutions charge over 25 percent interest on credit cards, they are not engaged in the business of making credit available,” Sanders said. “They are engaged in extortion and loan sharking. We cannot continue to allow big banks to make huge profits ripping off the American people.”

Hawley framed the issue as a direct economic threat to working families.

“Working Americans are drowning in record credit card debt while the biggest credit card issuers get richer and richer by hiking their interest rates to the moon,” Hawley said. “It’s not just wrong, it’s exploitative. And it needs to end.”

The legislation remains stalled in the Senate Banking Committee amid fierce opposition from the banking industry, which argues rate caps could reduce access to credit and push consumers toward payday lenders and less-regulated borrowing markets.

But consumer advocates say the current system is becoming unsustainable.

Duvi Honig, founder and chief executive of the Orthodox Jewish Chamber of Commerce, Newsmax contributor and economic policy analyst, said the imbalance between banks and consumers has reached dangerous levels.

“Banks have no right to make historic profits while abusing the consumer,” Honig said. “Legislation must create a balancing scale to limit their interest rates to help the everyday American family not fall more into debt and pay such high rates on credit cards when they are forced to rely on them simply to survive rising costs.”

The squeeze on households is being amplified by broader inflation pressures still moving through the economy. AAA data shows the national average gasoline price stands above $4.50 a gallon, while food prices remain materially above pre-pandemic levels. The April Consumer Price Index rose 3.8% year over year, according to the U.S. Bureau of Labor Statistics, while wholesale food prices posted their largest annual increase in more than three years.

The Federal Reserve — the institution many Americans hoped would eventually deliver relief through lower interest rates — remains trapped between slowing the economy and containing inflation.

Mortgage rates remain elevated above 6%. Auto financing remains expensive. Credit card borrowing costs remain punishingly high. And while Americans continue hoping for meaningful rate cuts, Federal Reserve officials have repeatedly signaled caution because inflation pressures have not fully disappeared.

Former Cleveland Fed President Loretta Mester told CNBC this month that inflation still makes aggressive rate cuts difficult to justify. “I just don’t think right now he can make those arguments in a credible way, because we have an inflation problem,” Mester said, referring to new Federal Reserve Chairman Kevin Warsh.

That leaves millions of households trapped in an increasingly difficult position.

They are still working.

Still paying bills.

Still functioning.

But increasingly doing it while carrying more debt, more stress and less financial flexibility than they had just a few years ago.

The New York Fed report ultimately reveals something larger than rising delinquency numbers.

It reveals an economy where millions of Americans are no longer borrowing for luxury or excess.

They are borrowing to keep up with everyday life.

And the longer inflation stays elevated while interest rates remain historically high, the harder that cycle becomes to escape.

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