Credit card debt in the United States has just hit a record high, reaching about $1.21 trillion in the second quarter of 2025[2][6]. This is not just a small increase—it is a jump of $27 billion from the previous quarter and nearly 6% higher than the same time last year[2][6]. For many Americans, this means bigger monthly bills, higher interest payments, and more stress about money. But why is this happening now? The reasons are a mix of economic pressures, changing habits, and some deeper trends in how people use credit.
One of the biggest reasons for the rise in credit card debt is the ongoing impact of inflation. Prices for everyday items like food, gas, and rent have gone up over the past few years. Even though inflation has slowed down a bit, many people are still feeling the pinch. When paychecks do not stretch as far as they used to, more people turn to credit cards to cover basic expenses[1][6]. This is a clear sign of financial strain—using credit not for extras, but for necessities.
At the same time, interest rates on credit cards are very high. The average annual percentage rate (APR) is around 21% for all accounts, and about 22% for accounts that actually carry a balance[2]. This means that if you do not pay off your balance each month, the interest charges add up quickly. For people who already have debt, these high rates make it even harder to pay down what they owe. The cost of carrying a balance is more expensive than it has been in years, which can trap people in a cycle of debt[2][3].
Another factor is job instability and economic uncertainty. While the job market has been strong in some areas, not everyone feels secure. Some people worry about layoffs or cuts in hours, especially in industries that are sensitive to economic changes. When people are unsure about their income, they may rely more on credit cards to get by[1]. In some states, like Texas, there is a high rate of “distressed accounts”—meaning people have at least one credit account in forbearance or deferred payments[1]. This shows that even in places with strong economies, many households are under pressure.
Younger generations are carrying more credit card debt than older ones. Millennials now have a higher average balance ($6,961) than baby boomers ($6,795), and Generation X leads all age groups with an average balance of $9,600[3]. Generation Z, while starting with lower balances, is also increasing its debt each year[3]. This trend suggests that younger adults are facing unique financial challenges, possibly due to student loans, high housing costs, or lower savings. Older generations, by contrast, are slowly paying down their balances[3].
Not everyone carries a balance every month. In fact, fewer than half of adult credit cardholders (46%) carried a balance for at least one month in the past year[4]. But for those who do, the burden is growing. The percentage of people who are delinquent on their payments—meaning they are at least 30 days late—is about 3.05%, which is near historic lows but still a concern[4]. While this is much lower than during the Great Recession, when delinquencies peaked at nearly 7%, it shows that some people are struggling to keep up[4].
Credit card debt is not just a financial issue—it can also affect personal relationships. A recent survey found that 42% of divorced Americans said credit card debt and overspending played a role in their divorce, up from 34% last year[5]. Nearly two-thirds of Gen Z respondents said credit card debt contributed to their divorce, the highest of any age group[5]. This highlights how money problems can spill over into other parts of life, adding stress to families and marriages.
So, what does all this mean for the average person? For many, it is a warning sign. High credit card debt can lead to more stress, lower credit scores, and even bankruptcy if it gets out of control[1]. It can also make it harder to save for the future, buy a home, or handle unexpected expenses. While some people use credit cards responsibly and pay off their balances each month, a growing number are using them as a lifeline—a way to make ends meet when times are tough.
There are steps people can take to manage their debt, such as creating a budget, cutting unnecessary expenses, and seeking help from nonprofit credit counselors[6]. But the bigger picture is that record-high credit card debt is a symptom of broader economic challenges. Until wages keep up with the cost of living, and until interest rates come down, many Americans will continue to rely on credit cards to bridge the gap. This is not just a personal finance issue—it is a reflection of the pressures facing households across the country.