Credit card debt among U.S. consumers reached $1.21 trillion, the highest level on record since the Federal Reserve began tracking the data over 25 years ago.
According to its Q4 2024 findings, credit card balances increased by $45 billion in Q4, reflecting a more than 7% year-over-year increase. At the same time, credit card delinquency rates remained high, with 7.18% of balances reported as delinquent over the last year.
Despite rising credit card balances and increased delinquencies, U.S. consumers continued to accumulate debt throughout the holiday season. More than a third of respondents said they took on additional debt during the period, and nearly half stated these expenses were unplanned. According to LendingTree, the average consumer added $1,181 to their credit card bill in the holiday season, up from $1,028 the previous year.
Continuation of a Trend
Data from the Federal Reserve points to a continuation of an ongoing trend. Not only is credit card debt mounting, but over 10% of consumers are also making only the minimum payments on their balances.
Inflation has been one of the culprits behind the rising dependence on credit cards, a trend that accelerated in the wake of the pandemic. In addition, high interest rates have made carrying a balance even more expensive.
Over the past few years, the Federal Reserve has raised interest rates, causing the average credit card rate to skyrocket over 20%. However, despite the Fed lowering its benchmark rates in the latter part of last year, credit card rates have yet to decline significantly.
Fragile Segments
The strain of rising prices and interest rates has particularly impacted lower-income households. In addition, more retirees—who traditionally live within fixed budgets—have turned to credit cards to make ends meet. According to data from the Employee Benefit Research Institute, over two-thirds of U.S. retirees carried outstanding credit card debt last year, a substantial increase from previous years.
“What is important here is that not all card segments are showing signs of stress, but the most fragile segments—those with low FICO Scores, lower incomes, and less experience with credit—indicate downfield risk in 2025,” Brian Riley, Director of Credit and Co-Head of Payments at Javelin Strategy & Research, told PaymentsJournal.
“When you consider that revolving consumer debt is at an all-time high, the problems of inflation continue to stress household budgets, and issuers must keep a keen eye on vulnerable portfolio indicators,” he said.
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