Jacob ramirez, a 31-year-old operations manager for a café chain, has long struggled to make ends meet. By 2022 he, his wife and their dog were in a one-bedroom flat in Pomona, east of Los Angeles. In 2023, owing $28,000 on five cards, Mr Ramirez turned to a non-profit debt-counselling service. He is on track to pay his debts by 2028.
In college he used a credit card to buy textbooks; after graduating, he occasionally did so to pay rent and utility bills.
But rising rent and other expenses—“like an anaconda snake choking me out”—pushed him deeper into debt.
The typical renter has just $2,000 in liquid savings, according to the SCF, versus $12,000 for mortgage-holders. The resumption of student-loan repayments after the covid-19 pandemic added to the strain, accounting for about half of the recent rise in renters falling behind on their debts, but only about a quarter of that among mortgage-holders. Another Fed survey finds that more than one in ten took out a payday loan or paycheque advance in 2025, nearly twice the share in 2019.
Next, a lack of savings to fall back on. Homeowners also tend to have much larger investment portfolios to tap. Renters are putting off paying other bills. Some are turning to other forms of short-term borrowing.
“A lot of homeowners are supporting their spending by withdrawing from their brokerage funds,” says Ted Gayer of the JPMorgan Chase Institute, a think-tank within a bank. Based on data from the FINRA Foundation, after controlling for income, age and other demographic factors they have gone from being less likely than mortgage-holders to incur late fees on credit cards to being more likely, according to our calculations. Saving must wait: “As rents increase, the ability to save, whether it’s for a down payment, for an emergency, for whatever, is really much harder,” says Whitney Airgood-Obrycki of Harvard University’s Joint Centre for Housing Studies.
