Credit Card Debt Hits Record $1.28 Trillion

Concerns rise over 'K-Shaped' economic recovery

Published on Feb. 10, 2026

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American consumers ended 2025 with a record $1.28 trillion in credit card debt, a 5.5% increase from the previous year. Researchers point to a 'K-shaped' economic recovery, where higher-income consumers continue to spend robustly while lower-income groups struggle to make ends meet, reflected in rising delinquency rates across various loan types.

Why it matters

The surge in credit card debt, coupled with the uneven economic recovery, signals growing financial strain for many American households. This trend underscores the importance of financial literacy, responsible credit card usage, and proactive debt management strategies.

The details

Over half (55%) of consumers are now using credit cards to cover essential expenses, suggesting that many are turning to credit to bridge the gap between income and the rising cost of living. Elevated delinquency rates are particularly pronounced in lower-income areas, highlighting the disproportionate impact of economic pressures on vulnerable populations. With average credit card interest rates hovering around 20%, carrying a balance can be incredibly expensive.

  • In the fourth quarter of 2025, credit card balances increased by $44 billion.
  • Credit card balances often increase at the end of the year due to increased holiday spending.

The players

Federal Reserve Bank of New York

The organization that revealed the record $1.28 trillion in outstanding credit card debt.

Achieve

A company that reported that over 55% of consumers are using credit cards to cover essential expenses.

President Trump

Proposed temporarily capping credit card interest rates at 10% to offer relief to indebted consumers.

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What’s next

The judge in the case will decide on Tuesday whether or not to allow Walker Reed Quinn out on bail.

The takeaway

The combination of rising debt, high interest rates, and a pessimistic economic outlook paints a challenging picture for many American households. The trend underscores the importance of financial literacy, responsible credit card usage, and proactive debt management strategies.