Personal Loans Surge: US Consumers Borrowing More Amid Rising Costs | Scripps News
The weight of everyday expenses is increasingly pushing Americans toward personal loans, a trend that’s particularly noticeable as we move further into 2026. It’s not necessarily a sign of reckless spending, but rather a reflection of a financial squeeze where wages haven’t kept pace with rising costs. Here in Chicago, that pressure is acutely felt, from the cost of commuting on the ‘L’ to the ever-increasing property taxes in neighborhoods like Lincoln Park and Lakeview.
The Rise of the Personal Loan: A National Trend
Nationwide, Experian data reveals that over a third of consumers – 38% – currently hold a personal loan. This figure has been steadily climbing since 2017, and experts anticipate continued growth throughout 2026, particularly as individuals seek ways to refinance existing debt. The average balance on these loans is now topping $19,000, a significant amount that underscores the financial challenges many families are facing. Interestingly, despite the increase in loan volume, the delinquency rate remains relatively stable, hovering around 4% over the past two years.
Economic Conditions and the Borrowing Surge
A recent Experian survey of 1,005 consumers highlighted a direct correlation between economic conditions and the willingness to take on personal loans. A substantial 42% of respondents indicated that the current economic climate makes them more likely to pursue a loan in 2026. This isn’t simply about wanting to buy more; it’s about maintaining a standard of living in the face of inflation and stagnant wages. As economics professor Michael Snipe points out, a spike in loan applications is often a clear indicator that consumers are struggling to bridge the gap between their income and expenses. “If wages aren’t going up, that’s gonna have to get made up in taking on debt,” he explains.
Personal Loans as a Financial Tool: A Double-Edged Sword
While the increase in borrowing might sound alarming, personal finance expert Erica Sandberg emphasizes that personal loans aren’t inherently negative. In fact, they can be a smart financial tool when used strategically. One of the most common and beneficial applications is debt consolidation, particularly for high-interest credit card debt. Credit card interest rates can easily exceed 20%, and often climb even higher, making it difficult to make significant progress on repayment. A personal loan, typically offered at a lower, fixed interest rate, can provide a more manageable path to financial freedom.
Miranda Valencia, a mother of six, exemplifies this scenario. She successfully consolidated her credit card debt with a personal loan, escaping the cycle of perpetually high interest charges. Sandberg notes that personal loan rates are often significantly lower – potentially in the range of 10-15% – creating substantial savings over time. Though, she cautions that these loans should be approached with careful consideration. “These are not something that you would take on lightly. It needs to be part of an overall personal finance strategy,” she advises.
The Chicago Context: Navigating Debt in the Windy City
Here in Chicago, the cost of living presents unique challenges. Beyond the national trends, residents face specific pressures. The high cost of housing, whether renting in Wicker Park or owning a home in Beverly, coupled with transportation expenses and the state’s relatively high property taxes, contribute to a significant financial burden. The Illinois Department of Financial and Professional Regulation (IDFPR) offers resources for consumers struggling with debt, but many residents still find themselves turning to personal loans to manage their finances. The Federal Reserve Bank of Chicago also publishes regular reports on regional economic conditions, providing valuable insights into the financial health of Illinois residents.
the impact of rising auto loan delinquencies, as reported nationally, is also being felt in Chicago. As car payments become more difficult to manage, some individuals may turn to personal loans to consolidate those debts as well. This creates a complex web of financial obligations that requires careful planning and responsible borrowing.
Navigating the Landscape: Local Resources for Chicago Residents
Given my background in financial journalism and analysis, if this trend is impacting you here in Chicago, here are three types of local professionals you should consider consulting:
- Certified Financial Planners (CFPs): Look for a CFP with experience in debt management and consolidation. They can help you assess your overall financial situation, develop a personalized budget, and determine if a personal loan is the right solution for your needs. Ensure they are fiduciaries, meaning they are legally obligated to act in your best interest.
- Non-Profit Credit Counseling Agencies: Several reputable non-profit credit counseling agencies operate in the Chicago area, such as the Consumer Credit Foundation. These agencies offer free or low-cost counseling services, debt management plans, and educational resources. Verify their accreditation with the National Foundation for Credit Counseling (NFCC).
- Consumer Law Attorneys: If you’re facing aggressive debt collection practices or are unsure about your rights, a consumer law attorney can provide legal guidance and representation. Look for an attorney specializing in debt relief and bankruptcy, and check their standing with the Illinois State Bar Association.
Ready to find trusted professionals? Browse our complete directory of top-rated financial experts in the Chicago area today.