Forecast shows consumer credit stress rising, what SMBs need to do now

Americans’ financial stress is hovering near record highs, according to a new forecast from the National Foundation for Credit Counseling. The NFCC also reports a sharp surge in consumers seeking debt relief help, a trend the nonprofit says is a warning sign for the broader economy.

For small business owners, this forecast means you have time to take action before conditions worsen. Businesses that extend customer credit may want to review and tighten their policies now. Those carrying inventory may want to take a closer look at what they are stocking as customers start to pull back on discretionary spending.

Rising gas prices & inflation squeezing households

With gas prices above $4 a gallon and annual inflation running near 4%, household budgets are being stretched across the country. Consumer debt on credit cards and auto loans is near historic highs.

The total U.S. household debt reached $18.8 trillion in the first quarter of 2026, according to the Federal Reserve, with credit card balances alone standing at $1.25 trillion.

“When we see a sharp increase in people actively seeking credit counseling, it’s the canary in the coal mine,” said Mike Croxson, CEO of the NFCC, in the company’s release.

Croxson adds, “It tells us that the pressure from sustained credit reliance and affordability challenges has reached a tipping point.”

Credit counseling: The canary in the coal mine

Consumer financial stress is forecast to hit 6.7 out of 10 in the second quarter of 2026, according to the NFCC’s Financial Stress Forecast. The rating has remained at or above 6.3 since the end of 2024, compared with a post-pandemic low of 3.5 in 2021.

The FSF is a forward-looking indicator that combines proprietary counseling intake data with Federal Reserve data on loans, delinquencies and charge-offs. Unlike standard delinquency reports, the FSF identifies stress before it results in charge-offs.

“Consumers want to manage their obligations responsibly, but their traditional capacity to do so is evaporating under current market conditions,” Croxson said.

The spike in consumers seeking credit counseling is itself a key signal.

Call for extended Debt Management Plans

The NFCC is calling on creditors to expand support for extended Debt Management Plans to prevent widespread defaults. Through a DMP, the organization negotiates directly with creditors on a consumer’s behalf, reducing interest rates from around 25% to 10% or lower. Late fees and over-limit fees are stopped upon enrollment.

The NFCC says consumers who get their debt under control are often able to stabilize their broader household budgets.

What business owners can do now

The NFCC’s financial forecast offers a practical signal for small business owners. Consumers under sustained financial pressure spend more carefully, take longer to pay, and are more likely to pull back on discretionary purchases. Business owners who understand that dynamic can get ahead of it.

A few areas worth attention: tighten credit and receivables policies now, before stress shows up in late payments. Revisit pricing and payment options to meet customers where they are. And watch cash flow closely.

The NFCC’s own message to consumers is that seeking help early, before missing payments, produces better outcomes. The same logic applies to business owners managing their own financial exposure.