American Borrowers Are on Shakier Ground. These Charts Show Why.

But Americans who need to borrow now stand on shakier ground. The costs to borrow for a home, a car or on a credit card are at the highest levels in decades, after the Fed raised rates nearly a dozen times in the past two years. The total amount of interest consumers paid on mortgages in 2023 rose 14% from a year earlier, according to Bureau of Economic Analysis data. It jumped 50% for other types of consumer debt, such as credit cards and auto loans.

This is in many ways the desired effect, since higher rates are meant to cool the economy. The central bank has penciled in just one rate cut this year, though more investors are betting on multiple cuts after promising inflation data.

Inflation has eased significantly since the pandemic, but years of faster-than-usual price increases have added up. Many households have spent down the glut of cash they saved in the pandemic. The top 10% of households by income, or those earning $245,000 or more a year, hold more than three-quarters of excess savings, according to Moody’s Analytics.

Households have relied more on credit cards, and more have carried balances month to month.

Balances rose to more than $1.1 trillion in the first quarter, New York Fed data shows. That was the second-highest balance on record, after the fourth quarter of last year, and an increase of around a third compared with 2022. For individual borrowers, the average total credit-card balance was more than $6,000 in the first quarter, according to TransUnion, an increase of nearly a quarter from two years earlier.

The increase has occurred as interest rates on credit cards are at record highs. The average annual percentage rate for credit cards hit around 22% this year, according to the Fed, a peak in data that goes back to 1996. The average rate was around 15% two years ago. Interest rates tend to be higher than the average for borrowers with lower credit scores or for store credit cards.

Higher rates can add up quickly for those borrowers. At a typical 29% annual percentage rate, the minimum monthly payment on the average credit-card balance of roughly $6,200 would be more than $200, according to Bankrate. It would be about $175 at 22% and $140 at 15%.

Borrowers are increasingly falling behind, especially those who carry high balances. Delinquency rates for credit-card accounts rose above 3% in the first quarter, the highest level since 2011, Fed data shows. Around a third of balances for borrowers with nearly or completely maxed-out credit cards went into delinquency, according to the New York Fed. 

Homeownership has become a pipe dream for many Americans who didn’t buy before mortgage rates roughly doubled in 2022. Would-be sellers are reluctant to give up their low rates, limiting inventory and keeping home prices at record highs. Renters, meanwhile, are falling behind on their debt payments at higher rates than homeowners. 

Americans have separately racked up balances on buy now, pay later, a fintech loan product that often doesn’t show up on credit reports. More than a third of Americans have used at least one buy now, pay later service at checkout, according to data from Bankrate. 

Payments for federal student loans resumed last fall, with some borrowers in worse financial shape than before the two-year pause. Around 40% of student-loan borrowers missed the first required payment, according to the U.S. Education Department.

More borrowers have struggled to keep up with payments on auto loans since the pandemic, which led to a historic rise in car prices. Auto-loan write-offs at banks were recently at the highest levels since 2011, Moody’s Analytics data shows. 

Interest rates on car loans have continued to climb since then. Other costs for car-loan borrowers—such as vehicle insurance premiums, maintenance and repairs—also have jumped.

More borrowers owe more than their car is worth, and vehicle repossession volumes are also on the rise, according to the automotive-research site Edmunds and Cox Automotive.

Write to Gina Heeb at gina.heeb@wsj.com and Kailyn Rhone at kailyn.rhone@wsj.com