Credit card debt hits record $1.29 trillion as households buckle

Credit card balances climbed to a record $1.29 trillion in the third quarter, as Americans increasingly rely on plastic to cover everyday costs, the Federal Reserve Bank of New York reported.

Balances rose $22 billion in the July-to-September period, up 4.2% from a year earlier. Total household debt, including mortgages, auto loans and student loans, also hit a record $19.1 trillion, expanding by $334 billion for the quarter.

The average credit card balance per consumer stands at $6,678, up 2.4% year over year, according to a separate report from TransUnion. The number of people with credit cards rose to 178 million from 174.8 million a year earlier.

“Overall debt has been growing,” the New York Fed researchers said on a press call Tuesday. “This does reflect financial hardship out there.”

The cost of carrying that debt is rising at the same time. The average interest rate on a new credit card offer is about 24%, according to data from LendingTree. With the Federal Reserve signaling another rate hike in December after Tuesday’s hot inflation report, APRs will climb further.

“Credit cards continue to be one of the most expensive ways to borrow,” said Charlie Wise, TransUnion’s senior vice president of global research and consulting.

The profile of the borrower is changing. An increasing share of new credit cards have gone to borrowers with lower incomes and credit scores, and “those accounts are now showing higher levels of distress,” the New York Fed researchers wrote in a blog post. After issuers loosened lending standards during the pandemic, delinquency rates rose in the years that followed.

“Macroeconomic headwinds, namely high inflation and rising borrowing costs, have squeezed consumers, with inflation outpacing wage growth for low-income brackets,” the New York Fed said.

Stubborn inflation has stretched on for years. The consumer price index rose 0.4% in October, more than expected, the Bureau of Labor Statistics reported separately Tuesday. Food costs accelerated 0.5% and shelter costs rose 0.3%. The Fed has been unable to get inflation back to its 2% target for more than five years.

“Higher prices and higher rates have pushed more people into debt,” said Ted Rossman, principal consumer finance analyst at Money Management International, a nonprofit credit counseling agency. “Balances have continued to swell in the wake of the pandemic, and even though the growth rate is now slowing, from a household finance standpoint, a lot of damage has been done.”

The reports land in a political environment shaped by economic dissatisfaction. Voters cited the cost of living and government corruption as their top concerns in last week’s midterm elections, according to the CNBC Voter Poll, contributing to Democrats’ sweep of both chambers of Congress.

“The throughline connecting so many of Tuesday’s outcomes was a recognition that the American economy is failing American families,” said Kyle Moore, chief economist at the nonpartisan think tank The Century Foundation.

The strain is visible in other corners of household finance. Auto loan delinquencies have been rising for over a year, particularly among subprime borrowers. Student loan payments resumed in October 2025 after a five-year pause, and the transition rate into delinquency has been climbing. Mortgage payments on homes purchased in 2024 and 2025, when rates were above 7%, are eating into disposable income. The personal savings rate, which spiked above 30% during the pandemic, has fallen below 4%, its lowest level since 2008. Households have gone from saving money to spending it to borrowing against it, and the borrowing is running out of room.

The credit card number is the one that matters most for the short term. Credit cards are the first bill people stop paying when money gets tight, because the consequences are slower to arrive than missing a mortgage or car payment. A missed mortgage payment threatens your home within months. A missed car payment threatens your transportation within weeks. A missed credit card payment threatens your credit score, which matters, but not immediately. Rising credit card delinquencies are an early warning signal for the broader economy, and the signal is flashing.

What I think

The $1.29 trillion number is a record, but the record is not the story. The story is the composition of the debt. The people adding balances are increasingly the people least able to pay them off. Low-income borrowers, subprime credit scores, delinquencies rising. This is not a story about consumers confidently spending. It is a story about consumers surviving.

The 24% average APR is the number that should make you angry. The Fed raises rates by a quarter point, and credit card companies raise their APRs by a full point. The spread between the prime rate and credit card interest rates has been widening for years, and nobody in Washington has done anything about it. The Credit Card Competition Act, which would have capped late fees and forced competition on interchange, died in the Senate last year.

The political implications are clear. Voters told pollsters the economy was their top concern, and they voted out the party in power. The data released Tuesday explains why. When the average household owes $6,678 on cards charging 24%, and groceries cost 5% more than they did a year ago, and the Fed is about to raise rates again, the math does not work. The economy is growing, but the people in it are not. The gap between GDP and household balance sheets is where the political pressure lives, and that pressure is not going away.