Americans are carrying more credit card debt than ever. Balances hit $1.28 trillion by the end of last year’s fourth quarter, a $44 billion jump in three months, according to data the Federal Reserve Bank of New York released Tuesday.
The year-over-year number looks worse. Balances climbed 5.5% compared to the same period in 2024.
Holiday shopping always pushes credit card use higher, but New York Fed researchers say there’s more going on. Despite problems in the job market, people kept spending through the final months of 2025. The catch? Most spending came from wealthier households, not regular families.
“You see evidence consistent with a ‘K-shaped’ economy,” Fed researchers said during a Tuesday call. “Some groups are really struggling.”
The split between rich and poor shows up in the numbers. Delinquencies on auto loans, credit cards, and home equity lines all went up. Mortgage payment problems are getting worse too.
Low-income neighborhoods are getting hammered. Delinquency rates there run much higher than the national average, Fed researchers found.
Consumer confidence drops as reality sets in
A Monday survey from the New York Fed backs this up. Fewer Americans think their finances will improve over the next year. More expect things to get worse.
About 175 million Americans have credit cards. Around 60% don’t pay off the full balance each month, which means they’re paying interest charges that average around 20%.
Debt management company Achieve released findings Monday showing 55% of cardholders use credit to cover basics like groceries and utilities. The survey of 2,000 people found many have to choose between paying credit cards and buying necessities.
“This is what the K-shaped economy looks like in the real world,” said Andrew Housser, who runs Achieve. “There’s an affluent half of the population whose financial lives aren’t disrupted by momentary inconveniences. But for everyone else, financial triage and tradeoffs are a way of life.”
He added “The longer this persists, the more the gap widens.”
How rate caps could reshape credit access
President Donald Trump recently proposed capping credit card rates at 10% temporarily. For the 60% of cardholders paying interest, this could cut their costs in half. As Cryptopolitan reported on Trump’s executive action to cap card interest rates, the plan targets what the administration calls predatory lending by big banks.
Banks aren’t having it. Industry leaders say they’ll fight any price controls, just like they blocked the Consumer Financial Protection Bureau’s attempt to limit late fees last year. Wall Street blasted Trump’s 10% cap proposal, with major banks warning about reduced credit access.
JPMorgan CEO Jamie Dimon called Trump’s card rate cap an “economic disaster” in earlier Cryptopolitan coverage, saying it would force banks to cut off credit to millions.
Wages haven’t kept up with living costs. Inflation ate savings. The job market started showing problems. People used credit cards when paychecks came up short.
Two things could happen now. If Trump’s rate cap somehow passes despite bank pushback, millions of borrowers get relief. But banks might tighten credit standards, making cards harder to get for people who need them.
More likely, nothing changes. That means more families falling behind, more delinquencies, and a bigger gap between those who can handle economic problems and those who can’t. Without policy changes or higher wages, expect that $1.28 trillion number to keep growing through 2026.
