Record Credit Card Debt: US Households Face Rising Delinquency Rates

The landscape of American household finance is signaling a critical juncture as credit card debt in the United States has once again surged, reaching a level of $1.21 trillion. This figure not only matches a previous record high but is accompanied by a concerning rise in delinquency rates, underscoring the growing financial strain on a significant segment of the population amid persistent inflationary pressures and the unwinding of pandemic-era support measures.

• U.S. credit card debt has reached a record $1.21 trillion.
• Balances increased by $27 billion, or 2.3%, in Q2 2025.
• 6.93% of credit card balances transitioned into delinquency over the past year.
• Financial stress is concentrated among subprime borrowers and younger individuals.
• Nearly half (46%) of credit card users carry a balance, facing average APRs over 20%.
• Paying only minimums on an average $6,371 balance could take over 18 years and accrue $9,259 in interest.

The Surge in Debt and Delinquencies

Data from the Federal Reserve Bank of New York‘s latest quarterly household debt report revealed that credit card balances increased by $27 billion in the second quarter of 2025, marking a 2.3% rise from the preceding quarter. Concurrently, a substantial 6.93% of credit card balances have transitioned into delinquency over the past year. Federal Reserve researchers attribute this uptick partly to the “excessive flexibility” extended during the pandemic, which, combined with accumulated spending, has left many households financially overextended as the cost of living escalated.

Uneven Distribution of Financial Strain

This financial pressure is not uniformly distributed across the economic spectrum, illustrating a widening disparity among borrowers. According to insights from Equifax, while some consumers continue robust spending despite elevated prices and interest rates, the most significant stress is concentrated among subprime borrowers—those with credit scores below 600. Tom O’Neill, a market advisor at Equifax, characterizes this trend as a “growing pattern in K,” signifying a divergent experience where a segment of the population successfully manages finances while others face severe repayment challenges. This vulnerability is further exacerbated for younger individuals with limited credit histories, particularly following the recent resumption of student loan repayments.

Long-Term Implications for Household Stability

The implications for household financial stability are significant. Matt Schulz, chief credit analyst at LendingTree, cautions that many families are precariously close to financial distress, potentially “a layoff or medical emergency away from falling into serious financial trouble.” While Bankrate data indicates that 54% of credit card users pay their full balance monthly, effectively avoiding interest charges, nearly half—46%—carry a balance. For those carrying debt, with average annual percentage rates exceeding 20%, managing an average balance of $6,371 by making only minimum payments could translate into over 18 years of repayment and an additional $9,259 in interest alone, as calculated by Bankrate.

A Bifurcated Economic Reality

The current environment highlights a stark contrast in credit card utilization: for some, it remains a tool for rewards and convenience; for others, it has become a trap of costly, accumulating debt. This bifurcated reality, as underscored by Ted Rossman of Bankrate, poses a challenge not only for individual households but also presents broader economic implications concerning consumer resilience and potential future spending patterns within the economy.