Credit Card Debt

If you want to understand the financial pulse of U.S. households, don’t just look at mortgages or the stock market—look at the credit-card bill that lands every month. It’s where rising prices, higher interest rates, and everyday life collide. In 2025, those bills are bigger, more expensive to carry, and harder for a growing share of Americans to keep current. This piece unpacks the latest numbers on balances, monthly payments, and delinquencies—then zooms in on who’s struggling most, why minimum payments are a trap, and what it all means for banks, retailers, and the broader economy.

The Big Number: How Much We Owe

Total U.S. credit-card balances climbed to about $1.21 trillion in the second quarter of 2025, up by $27 billion from the prior quarter and roughly 5.9% higher than a year earlier. That keeps card debt near its all-time high, according to the New York Fed’s Quarterly Report on Household Debt and Credit.

That stock of revolving debt sits on top of a still-elevated interest-rate environment. The Federal Reserve’s G.19 data show average APRs on credit cards remain around 21% across all accounts, and about 22% for accounts that actually incur interest. In plain English: for revolvers (people who carry a balance), card debt is expensive again.

The Monthly Reality: What Do People Pay?

There’s no single “official” average card payment because dollar amounts vary with balances and behavior (some pay in full, some pay the minimum, many pay something in between). Two datapoints anchor the picture:

• In early 2025, Experian reported that the typical U.S. consumer carried a credit-card balance of about $6,618. While this marked a modest dip from the highs seen in late 2023, it still represents a significantly heavier load than Americans held before the pandemic.

• Average monthly card payment: Experian estimates the average monthly credit-card payment at about $181 in early 2025—up modestly from 2024. Treat this as a national average across very different households.

• Minimums due: The CFPB’s latest market report (2023) finds the average minimum payment due on general-purpose cards was about $100 (private-label cards were lower). Minimums are typically calculated as the greater of a dollar floor (often $25–$35) or a small percent of the balance plus interest and fees—enough to keep the loan current, not enough to extinguish it quickly.

Behavior matters just as much as balances. Federal Reserve large-bank data show about 10–11% of active accounts paid only the minimum around late-2024 to early-2025, while roughly one-third to a bit more paid their statement balance in full each cycle. Everyone else paid more than the minimum but less than the full balance—i.e., they revolved.

What that means: the “average” monthly payment masks a polarized reality. A sizable cohort pays in full (avoiding interest entirely), a smaller but important group hugs the minimum (and pays a lot of interest), and a big middle carries balances and chips away monthly.

Are We Falling Behind? Delinquency and Charge-Offs

Two dials tell you when borrowers are hitting the wall:

1. Delinquency rate at banks: Across all commercial banks, the delinquency rate on credit-card loans is about 3.0% (Q2 2025), up from pandemic lows but not yet at Great Recession levels. Net charge-offs—what banks actually write off—are running a little above 4%, also elevated versus the immediate post-pandemic period.

2. People seriously behind: The St. Louis Fed reports the share of people with card balances 90+ days past due rose to about 12% in Q1 2025, with deterioration most pronounced among lower-income areas—evidence the strain is not confined to niche borrowers.

Banks have noticed. Large lenders are telling investors to expect card charge-offs to remain higher than the easy-money pandemic era.

Why It’s Getting Harder to Pay: Rates, Inflation, and Thin Buffers

Three macro headwinds shape the monthly bill:

• High APRs: The average APR on all card accounts hovered near 21% in May 2025, and ~22% on accounts that actually incur interest (revolvers). That’s far higher than pre-pandemic norms and compounds balances quickly when payments are light.

• Sticky living costs: Headline inflation has cooled from 2022’s peaks, but prices were still up ~2.9% year-over-year as of August 2025—with necessities like food still rising faster. Even “normal” inflation keeps budgets taut when wages don’t sprint ahead.

• Lower savings cushions: The personal saving rate has drifted back down to ~4.4%—thin by historical standards and a far cry from the pandemic boom in excess savings. Smaller buffers make it harder to smash down revolving balances when rates are high.

The upshot is straightforward: every dollar of balance “costs” more to carry, and households have less spare cash to accelerate payoff.

Who Owes What: Demographics, Income, and Region

By income: The delinquency deterioration since the pandemic has been broad-based, but it’s steeper in lower-income ZIP codes. In Q1 2025, both 30-day and 90-day delinquencies rose more in the bottom-income decile than in top-income areas—consistent with the idea that everyday inflation and high borrowing costs stress lower-income households first.

By age/generation: Multiple sources show Gen X typically carries the largest card balances, with Millennials rising as they form households and face higher costs. (The precise rank order moves with the cycle, but the age pattern—middle cohorts carrying the most—persists.)

By region/state: State-level data (from Experian and others) consistently show higher average balances in high-cost, high-income states and urban corridors—places like Alaska, Connecticut, New Jersey, and Washington, D.C.—while Midwestern states like Iowa tend to show lower average balances. (Local prices, incomes, and card penetration all matter.)

How many cards? Americans actively use about 3.7 credit cards on average, which partly explains why utilization and balances can vary so widely: many households spread spending—and risk—across multiple lines.

The Mechanics That Make Balances Hard to Kill

1) Minimum Payments

Minimum payments are designed to keep accounts current, not to erase balances quickly. Regulation requires your statement to warn how long payoff will take at the minimum and to show a 36-month payment that would fully retire the balance if you paid that fixed amount each month. The CFPB’s rulebook lays out the calculation that issuers must display.

In practice, minimums keep borrowers in debt for years. That’s why the CFPB’s market report tracks “payment rates”—what share of beginning-of-cycle balances gets paid by month’s end—which was roughly a third heading into the 2020s and surged temporarily during the stimulus era before settling back. If you consistently pay near the minimum, compounding interest eats much of each payment.

2) Compounding at High APRs

With average APRs around 21–22%, interest accrues quickly if you revolve. Even with an “average” payment of roughly $181/month, the math works against you if your balance is large and your payment barely covers accrued interest. (This is why two cardholders with the same balance can have wildly different payoff paths depending on APR and payment size.)

3) Credit Utilization and Your Score

Utilization—the percent of your available credit you’re using—is a core ingredient in credit-score models. While there’s no magic threshold, industry guidance is consistent: keeping utilization under ~30% helps, and single-digit utilization tends to be associated with the strongest scores. Lower utilization means less perceived risk, which can lead to better borrowing terms elsewhere.

Historical Context: From Pandemic Lows to a New Plateau

During the pandemic, fiscal transfers and reduced spending pushed card balances and delinquencies to multi-decade lows. As stimulus faded and prices rose, balances rebounded past their pre-2020 trend, and delinquencies more than doubled off the trough, though they remain below Great Recession peaks. The bank-reported delinquency rate at ~3% (Q2 2025) illustrates that we’re in a stressful but not crisis-level phase—one consistent with tight household budgets and high rates rather than a credit bust.

How Monthly Payments Behave Across the Cycle

Think of monthly payments as a tug-of-war between ability (income and savings) and incentives (APR and fees):

• When wages are growing, savings are fat, and APRs are low, households increase payment rates (and more become “transactors” who pay in full).

• When inflation eats disposable income and APRs jump, payment rates fall, more people revolve, and a larger share pay the minimum—exactly what bank data showed in late-2024 and early-2025.

The Fed’s Diary of Consumer Payment Choice adds a behavioral twist: Americans made about 48 payments per month in 2024, and credit-card payments drove much of the growth—a sign that cards have become the default way to transact, not just a borrowing tool. That ubiquity keeps balances sticky: the same card used for groceries and gas is the one that accrues interest if you fall short of paying in full.

What It Means for Households

1. Budget strain is back-loaded: With APRs north of 20%, the interest share of each payment balloons as balances grow. A $100–$200 monthly payment that felt manageable at low rates barely dents principal now.

2. Minimums are dangerous defaults: Roughly one in ten accounts riding the minimum isn’t a majority, but it’s large enough to shape issuer profits—and those borrowers face the steepest path out.

3. Utilization is a two-edged sword: High utilization can push down credit scores, making it costlier to refinance or consolidate debt—prolonging the cycle.

Practical takeaway: If you can’t pay in full, aim to raise your payment rate (e.g., by $50–$100 above the minimum), attack highest-APR balances first (the “avalanche” method), and look at time-boxed payoff goals (e.g., the 36-month benchmark you see on statements) to force compounding to work for you rather than against you. (The 36-month disclosure you see is there because regulators know how powerful this framing is.)

What It Means for Banks

Credit-card lending is a yield machine—high APRs and fees—but also the first place where household stress shows up. Rising charge-offs and delinquencies shave earnings and nudge issuers to tighten underwriting and raise pricing spreads over prime. Several large banks have already guided to higher card charge-offs into 2026, even as they remain well-capitalized. That means tighter credit for riskier borrowers and potentially slower account growth industry-wide.

What It Means for Retail Spending and the Economy

• Short-term support, medium-term drag: Cards help consumers smooth spending when cash is tight, which can prop up retail sales in the short run. But as more of each paycheck goes to interest and fees, there’s less capacity for discretionary purchases—a headwind for retailers and services tied to non-essentials.

• Savings dynamics matter: With the saving rate near ~4–5%, there’s not a lot of cushion to accelerate debt payoff if the labor market cools. That fragility can amplify downturns as households cut spending to stabilize balances.

• Policy sensitivity: If the Fed eases and APRs fall materially, revolving becomes less costly, freeing cash flow. But unless inflation falls further or wages outrun prices, the monthly pressure from card debt likely persists.

Regional and Market Nuance

Regional differences reflect cost of living and credit penetration. High-cost coastal markets and Alaska typically post higher balances, while states in the Midwest and some parts of the South post lower balances on average. Retailers operating in higher-balance markets can benefit from card-enabled demand but are also more exposed if delinquency waves rise locally.

The Outlook: What to Watch Next

1. APR trajectory: Watch the Fed, the prime rate, and the APR spread issuers add on top of prime. Even a 150–200 bp decline in APRs would materially change payoff math for revolvers. (The Philly Fed’s large-bank data show spreads over prime have widened to series highs—banks aren’t just passengers on monetary policy.)

2. Delinquencies and charge-offs: The bank delinquency rate (~3%) and charge-offs (>4%) will tell you whether stress is stabilizing or spreading. State-level and income-tier breakouts are the early-warning system.

3. Household buffers: Saving rates and real wage growth determine whether households can raise payment rates and move out of revolving status. If savings stay low and wages slow, balances stick.

Bottom Line

• Balances are near records and APRs remain high, so the same monthly payment buys less progress than it did a few years ago.

• About one in ten active accounts is paying the minimum, while roughly a third pay in full each cycle—the rest are in the expensive middle.

• Delinquencies are up from pandemic lows, especially among lower-income households, but banking-system measures point to stress, not crisis—for now.

• The average monthly card payment (≈ $181) gives a starting point, but the outcome that matters is your payment rate: the higher it is, the faster compounding flips from enemy to ally.

In short, the U.S. credit-card bill has become a monthly stress test. For households, the playbook is clear but not easy: pay above the minimum, target the highest APRs, keep utilization low, and use the 36-month benchmark on statements as a forcing function. For banks and retailers, the bill is a barometer—the first place cracks appear when budgets get tight, and the first place relief shows up if rates fall or real incomes improve.