Debt balances continue to rise, according to the latest data from the Federal Reserve Bank of New York. The latest quarterly report on household debt and credit shows that total household debt increased by $191 billion, or 1%, in the fourth quarter of 2025, to a new high of $18.8 trillion.
In particular, credit card balances increased by $44 billion in the fourth quarter to an all-time high of $1.28 trillion; Mortgage balances grew by 98 billion dollars, totaling 13.17 trillion dollars; and auto loan balances increased by $12 billion, totaling $1.67 trillion by the end of 2025.
Delinquency rates also saw a sharp rise in the fourth quarter, with 4.8% of outstanding debt in some stage of delinquency, driven by defaults among younger, lower-income borrowers and further evidence of a bifurcated or “K-shaped” economy.
Transitions into serious delinquency increased for credit card, mortgage, and student loan balances, while auto loans and home equity lines of credit decreased slightly. Student loan delinquencies continued to rise, with approximately 1 million borrowers in default and millions more in default on payments.
Read more: The best ways to pay off credit card debt
“When looking at the increase in debt (outstanding dollars), as more loans are originated, we would expect to see balances increase. However, looking at an average balance per account can give us a better idea of how American households are using their credit cards,” said Jesse Hardin, risk advisor at Equifax.
“For example, the average bank card balance per account in the US stood at approximately $1,890 in November 2025, which is actually stable in percentage terms compared to November 2024,” Hardin said. “The Consumer Price Index, which measures the price of goods and services paid by American households, increased approximately 2.7% year over year in November 2025. So, in this context, consumer credit card balances remain stable, on average, even as consumer prices increase.”
The current affordability crisis has more Americans turning to credit cards to cover everyday expenses.
Bankrate’s 2025 Credit Card Debt Report found that 46% of American adults who have credit cards currently carry a balance, often because it’s the only way to cover daily needs.
To make matters worse, average credit card interest rates are currently around 20%.
“Although American consumer debt is rising, the good news is that some delinquency rates have stabilized, while others are actually falling,” Hardin said. “Credit cards and personal loans are performing at or below the delinquency rates experienced in 2024.”
“In addition, many newer loans from these products appear healthier than loans issued immediately after the pandemic. That said, younger generations, especially Generation Z and some millennials, remain under pressure. The financial gap between generations continues to grow,” Hardin added.
Experts say it’s important to look at the bigger picture to fully understand why so many Americans are in the red.
“While most experts will correctly look at recent economic numbers, I also look at the story of the American consumer,” said Howard Dvorkin, president and CPA of Debt.com.
“If they are in their best earning years, they have survived the perfect storm of recession, pandemic and inflation,” Dvorkin said. “The cost of housing doubled between 2018 and 2024. The cost of a new car doubled between 2011 and 2025. Meanwhile, purchasing power grew less than 12% in that same period. With those economic factors against them, where else are Americans going to turn? No surprise, it’s credit cards.”
Carrying a credit card balance from month to month can be mentally and financially draining, especially if your credit card has a high APR and your minimum payments barely make a dent in your balance.
Making real progress starts with the right strategy. There is no one way to approach debt repayment; It’s simply about finding the method that works best for your situation.
Using a balance transfer card, for example, could be a good way to reduce the amount you pay in interest. With a balance transfer credit card, you can transfer existing debt from one account to another. These cards offer a lower interest rate for a limited period of time: often with a 0% APR that can last a year or more.
Once your balance is transferred (usually within a specific time period and for a fee), you can begin paying off your principal balance. When the introductory period ends, your issuer will begin charging interest on any remaining balance at the current regular APR.
Another option: a debt consolidation loan. This simplifies your monthly payments if you have more than one credit card with different interest rates and replaces them with a new fixed-rate, monthly payment loan.
Depending on your situation, you may not even need a separate loan or credit card; You may be able to make progress paying off your debt by implementing strategies like the snowball or avalanche method that targets your smallest balances first to build momentum or your largest balances first to pay the least amount of interest over time.
Read more: Debt Snowball vs. Debt Avalanche: Which Method is Better for Paying Off Debt?
So what if you’re in a real bind and can’t make any credit card payments? Well, you’re not completely lost. There are still steps you can take to improve your financial situation.
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Notify your creditors: Your credit card company may be willing to work with you to reduce your monthly payment or suspend your payments for a period of time, especially if there are extenuating circumstances at play. However, they can only help you if you are transparent and proactive about your financial situation.
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Consult with a credit counselor: Don’t be afraid to seek professional help if you feel like your credit card debt is getting out of hand and you don’t see a way out. You can find a qualified credit counselor through the National Foundation for Credit Counseling or the American Financial Counseling Association. They can help you put together a debt management plan that works for you.
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Once you make that plan, stick to it: Consistency is key. Once you have a budget and debt management plan, being consistent and avoiding financial habits that can derail your progress are keys to eliminating those credit card balances and achieving financial freedom.