The federal government spent $1.27 trillion servicing its debt in the first eleven months of fiscal 2026, more than it spent across all twelve months of fiscal 2025. Treasury’s interest expense ledger, current through August 31, puts the fiscal year to date total at $1,267.8 billion against $1,220.0 billion for the whole of fiscal 2025, a gap of $47.8 billion with September still uncounted. Fiscal 2026 ends Wednesday, September 30. The driver is not a sudden shock but a slow repricing: the average interest rate Treasury pays across all interest bearing debt reached 3.490% on August 31, the highest reading since May 2009, and it has risen in each of the last eight monthly readings. Total public debt outstanding stood at $40.069 trillion on September 24, up $2.431 trillion since fiscal 2026 began, a larger annual increase than the $2.173 trillion added in fiscal 2025. Two forces are compounding. The stock of debt is growing, and the coupons on the maturing paper Treasury keeps rolling are being replaced at yields that have climbed to multi decade highs. For households, the same repricing that lifts Treasury’s bill is what sets the current prime rate and the benchmark yields behind mortgage and deposit pricing. The interest on the national debt is now the clearest read on where the rate cycle has landed.
- Interest expense hit $1,267.8 billion in eleven months, topping all of fiscal 2025 by $47.8 billion.
- The average rate on Treasury debt reached 3.490% in August, the highest since May 2009.
- Total public debt was $40.069 trillion on September 24, up $2.431 trillion this fiscal year.
- Debt held by the public rose $2.085 trillion; intragovernmental holdings rose $346 billion.
- Fiscal 2026 closes Wednesday. The next FOMC decision lands October 28.
Eleven Months Cost More Than Twelve
Treasury’s interest expense dataset breaks the bill into two halves. Interest on public issues, the securities sold to investors, came to $981.8 billion through August, against $973.7 billion for the full fiscal 2025. Interest credited to government account series, the special securities held by trust funds such as Social Security and Medicare, came to $286.0 billion against $246.4 billion a year earlier. The government account side is the faster mover, up $39.6 billion, because those balances reprice to prevailing Treasury yields on a rolling schedule and carry no market cushion.
Inside the public issues total, the mix has shifted. Accrued interest on Treasury notes reached $454.8 billion, already $29.9 billion above the full fiscal 2025 figure of $424.9 billion. Interest on bonds rose to $162.9 billion from $157.3 billion. Inflation compensation on Treasury Inflation Protected Securities climbed to $70.1 billion from $54.3 billion, a $15.8 billion jump that tracks the inflation prints of the past year. One line moved the other way. Amortized discount on Treasury bills fell to $231.8 billion from $271.7 billion, reflecting a smaller average bill stock rather than cheaper short term money.
How the Average Rate Reached 3.49%
Treasury publishes a weighted average interest rate across every outstanding security each month. That figure was 3.363% when fiscal 2026 opened on September 30, 2025. It fell slightly into January, touching 3.316%, then turned and climbed without interruption: 3.320% in February, 3.327% in March, 3.340% in April, 3.353% in May, 3.409% in June, 3.447% in July and 3.490% in August. The last time the government paid this much on average was May 2009, when the reading was 3.524%.
The acceleration from June onward is the tell. A weighted average moves only when maturing paper is replaced at a materially different rate, and the securities rolling off now were issued in a far cheaper decade. Treasury sold the 10 year note at 4.834% on September 10 and the 30 year bond at 5.308% on September 11, and the 5 year note cleared 5.033% on September 24. Every one of those replaces a coupon closer to 2%. The Federal Reserve raised its target range on September 17, lifting the effective federal funds rate to 3.88% and the prime rate to 7.00%, which pushes the front of the curve higher as well. The Fed meeting schedule puts the next decision on October 28.
Where the $2.43 Trillion Went
Total public debt outstanding closed September 24 at $40,068,807,991,924.84, against $37,637,553,494,935.61 on September 30, 2025. The $2.431 trillion added works out to roughly $6.8 billion a calendar day. Fiscal 2025 added $2.173 trillion by the same measure, so this year’s pace ran about 12% faster. Debt crossed the $40 trillion line on August 18 and has held above it on every business day since. The figure has drifted in a narrow band between $40.04 trillion and $40.18 trillion through September.
The split matters for who absorbs the cost. Debt held by the public, the portion sold into markets, rose $2.085 trillion to $32.363 trillion. Intragovernmental holdings rose $346 billion to $7.706 trillion. Roughly 86 cents of every dollar added this fiscal year had to find a buyer at auction, and buyers have been demanding more. The 10 year Treasury yield settled at 5.18% on September 24, its highest close since July 6, 2007, and the 30 year reached 5.47%, a level last seen in June 2004. Readers tracking the composition can follow who owns US debt and the longer arc in national debt by year.
What Changes for Your Money
Treasury’s borrowing costs and household borrowing costs are set by the same curve, so the repricing shows up on both sides of a consumer balance sheet. The prime rate has been 7.00% since September 17, and variable card APRs, home equity lines and many small business loans are quoted as prime plus a margin, so those adjusted within a billing cycle. Fixed loan pricing keys off the long end instead. With the 10 year at 5.18%, quotes on current mortgage rates sit well above where they were a year ago, and anyone shopping fixed installment credit will see the same drift in personal loan rates today.
The saver side of the ledger is the offset. Banks fund themselves against the same short term yields Treasury pays, so the 3 month bill at 4.24% sets a floor that competitive deposit products have to clear. That keeps CD rates and high yield savings accounts unusually attractive relative to the past fifteen years. The practical question is duration. Short deposits reprice quickly if the Fed reverses, while a longer certificate locks today’s yield. The gap between the 2 year and 10 year notes widened to 36 basis points on September 25 from 20 basis points on September 21, which is the market pricing more term premium rather than more cuts.
If you carry a variable rate balance, check the margin on your statement, not the headline APR. The margin is the fixed spread your lender adds to prime, and it is the only part you can negotiate or refinance away. At a prime rate of 7.00%, a card quoted at prime plus 14 costs 21.00%, while the same balance moved to a fixed rate installment loan is insulated from the next FOMC decision on October 28. Compare the two quotes on total interest paid, not on the monthly payment.
Frequently Asked Questions
How much interest does the US pay on the national debt?
The United States paid $1,267.8 billion in interest on the national debt during the first eleven months of fiscal 2026, through August 31, 2026. That already exceeds the $1,220.0 billion paid across all of fiscal 2025. Fiscal 2026 ends September 30, so the final figure will be higher.
Who owns most of the US national debt?
Debt held by the public accounts for $32.363 trillion of the $40.069 trillion total as of September 24, or about 81%. That category covers domestic investors, banks, pension funds, mutual funds, the Federal Reserve and foreign official and private holders. The remaining $7.706 trillion is intragovernmental, meaning it is owed by the Treasury to federal trust funds such as Social Security and Medicare. No single foreign country holds more than a small fraction of the public share, and domestic holders own the clear majority.
Why is the average interest rate on the debt still rising?
Treasury does not reprice its whole debt stock at once. It refinances maturing securities on a rolling schedule, so the weighted average rate moves only as old paper retires and new paper replaces it. Securities issued during the low rate decade carried coupons near 2%, while notes and bonds sold in September 2026 cleared between 4.834% and 5.308%. Each replacement pulls the average up. The reading reached 3.490% in August, the highest since May 2009, and has climbed in eight consecutive monthly prints.
Does the national debt affect my credit card rate?
Not directly, but through a shared mechanism. Card APRs are tied to the prime rate, which sits three percentage points above the top of the Federal Reserve’s target range and is currently 7.00%. The Fed sets that range to manage inflation and employment, not to manage the debt. What links them is that the same policy rate and the same Treasury curve price both the government’s borrowing and your revolving balance. When yields rise, Treasury’s interest bill and your APR move together, even though neither causes the other.
What happens to interest costs when fiscal 2027 begins?
The counter resets to zero on October 1, but the underlying cost does not. Roughly a third of marketable Treasury debt matures within a year, so fiscal 2027 opens with a large block of paper due to be refinanced at current yields. Unless those yields fall materially, the average rate keeps grinding higher and the annual interest total keeps climbing from the $1.27 trillion pace set this year. The October 28 FOMC decision is the first scheduled input.
Should I lock in a fixed rate now or wait?
That depends on your horizon, and no single answer fits every borrower. The market is currently pricing more term premium rather than near term easing: the spread between 2 year and 10 year notes widened to 36 basis points on September 25. A fixed rate removes exposure to the next several FOMC decisions, which matters most on balances you expect to carry for years. A variable rate keeps the option to benefit if policy reverses. Compare total interest across the full expected term before deciding.
Watching the Fiscal Year Close
Treasury posts final fiscal 2026 figures in the weeks after Wednesday’s close, and the September interest line will decide whether the year finishes above $1.35 trillion. The August personal consumption expenditures price index lands the same morning, and the September employment report follows on Friday. Both feed the October 28 decision. Track the policy path on the Fed rate forecast for 2026, the running total on current national debt, and the shape of the curve on the Treasury yield curve.
References
- U.S. Department of the Treasury, Fiscal Data. “Interest Expense on the Public Debt Outstanding,” August 31, 2026. Accessed September 28, 2026. fiscaldata.treasury.gov
- U.S. Department of the Treasury, Fiscal Data. “Debt to the Penny,” September 24, 2026. Accessed September 28, 2026. fiscaldata.treasury.gov
- U.S. Department of the Treasury, Fiscal Data. “Average Interest Rates on U.S. Treasury Securities,” August 31, 2026. fiscaldata.treasury.gov
- Board of Governors of the Federal Reserve System. “H.15 Selected Interest Rates,” release of September 25, 2026, data for September 24, 2026. federalreserve.gov
- Board of Governors of the Federal Reserve System. “FOMC Meeting Calendars and Information.” Accessed September 28, 2026. federalreserve.gov
- Federal Reserve Bank of St. Louis, FRED. “Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity (DGS10).” fred.stlouisfed.org
- Federal Reserve Bank of St. Louis, FRED. “Bank Prime Loan Rate (DPRIME).” fred.stlouisfed.org
