Introduction

The numbers are in, and they paint a troubling picture: America is in the midst of a credit card crisis. As the cost of living continues to rise, more consumers are turning to credit cards to make ends meet—but many are finding themselves trapped in a cycle of debt that’s becoming harder to escape. Recent reports reveal a surge in credit card delinquencies, with some of the highest rates seen in over a decade. From the young and financially vulnerable to those nearing retirement, people across the country are struggling to keep up with their monthly payments, leading to growing concerns about the long-term economic impact.

In this article, we'll explore the mounting evidence of this crisis, diving into the data that shows just how widespread and severe the problem has become. We'll also look at the human side of the issue—how credit card debt is affecting mental health, family dynamics, and overall financial well-being. If you’ve been feeling the strain of credit card debt, you’re not alone, and understanding the scope of the crisis is the first step toward finding a way out.

The balances consumers carry on their credit cards are getting out of hand

Credit card balances have reached a significant milestone, hitting $1.3 trillion in June 2024. With average balances increasing by over 30% in the past two years and consumers with lower credit scores accumulating debt at a faster pace, managing and paying down credit card debt has become increasingly challenging in the current economic environment.

1. Credit card debt hit $1.3 trillion for the first time in June 2024 (Federal Reserve, 2024)
2. Average credit card balances increased by over 30% from Q2 2022 to Q3 2024. The average balance held by a consumer now sits at $6,329. Pairing this with sky-high interest rates, paying off credit cards is harder than ever before (TransUnion, 2024)
3. Consumers with lower credit scores are increasing their credit card balances nearly 100% more than those with good credit scores (TransUnion, 2024). This shows that it is only getting worse for those who are already in a tough financial situation. 

Credit card delinquencies are on the rise

When a consumer struggles to make a payment, it's often a clear sign of financial strain. Unfortunately, credit card delinquency rates have been rising steadily, reflecting the growing pressures on household budgets across the country.

4. The Fed reported that credit card delinquency rates are the highest they have been since 2011 (Board of Governors of the Federal Reserve System, 2024)
5. At Synchrony Bank, the largest issuer of retail co-brand credit cards, the charge-off rate jumped from 3.5% to 5.6% in a year (AP News, 2024)

Credit card interest rates are getting out of hand

Rising interest rates on credit cards make it significantly more challenging for consumers to pay off their balances. As interest rates increase, the cost of carrying a balance grows, meaning a larger portion of each payment goes toward interest rather than reducing the principal debt. This can lead to a slower payoff process, higher overall debt, and greater financial strain, particularly for those already struggling to make minimum payments. Over time, this cycle can trap consumers in a revolving debt situation, where it feels impossible to become debt-free. 

6. As of December 27, 2023, the average credit card rate was 20.74 percent. That figure has jumped 4.44 percentage points since the beginning of 2022 — the most we’ve ever seen in a two-year span. (Bankrate, 2024) 
7. Credit card interest rates have nearly doubled from 12.9% in late 2013 (Consumer Finance Protection Bureau, 2024)

Consumers lack confidence in their ability to pay credit cards

Consumer confidence in managing credit card debt is alarmingly low, with many feeling trapped in a cycle of revolving balances. Nearly one-third of Americans with credit card debt believe they’ll always carry some amount of it, and only half of credit card customers think they can pay off their balances in full, reflecting widespread financial anxiety.

8. “Many who are indebted think they’ll be that way forever. The survey found that around one-third of Americans with revolving credit card debt (34%) say they’ll probably always have some revolving balances.” (Nerd Wallet, 2024)
9. Only half of America’s credit card customers believe they can pay off their December balance in full, according to an industry index (USA Today, 2024)
10. Gen Zers ranked credit card debt as the second most impactful factor on their finances in 2023 behind inflation (New York Life, 2024)
11. According to the LendingTree Credit Card Confidence Index, a monthly survey published since 2018, only half of America’s credit card customers believed they would be able to pay off their December balance in full from the 2024 holiday season (The National Digest)

Credit card debt is affecting people’s mental health

Credit card debt is taking a significant toll on people's mental health, with those in debt being three times more likely to experience depression, anxiety, and stress. The impact is evident, as nearly half of those burdened by debt report sleep problems, higher anxiety, and even diminished social lives, highlighting the deep emotional strain caused by financial worries.

12. “People with debt are three times as likely to have depression, anxiety and stress from the worry, according to AIMS Public Health.” (Bankrate, 2023) 
13. Participants found both financial and non-financial strategies to be helpful in managing stress. Activities like assessing budget allocations, paying off small bills first, and focusing on short- and longer-term financial goals helped them alleviate and/or cope with financial stress and improved mental well-being. Exercising and mindfulness also had a positive effect. (Financial Health Network, 2024) 
14. In 2022, just looking at credit card statements stressed out 39%. In 2023, it rose to 43% (PR Newswire, 2023) 
15. Although men in our sample carried 11% more debt than women, the men had 27% more income, which gave them a significantly greater cushion in dealing with the stresses of debt. (Journal of Family and Economic Issues, 2022) 
16. “Due to debt-related stress, 48% reported sleep problems, 40% had higher anxiety, 38% led diminished social lives and 34% experienced depression.” (Forbes, 2023) 

Credit card debt is disproportionally affecting vulnerable communities

Credit card debt is disproportionately affecting historically marginalized demographics, exacerbating financial vulnerabilities among already at-risk groups. Working-age disabled individuals are nearly three times more likely to face severe financial challenges, with half struggling to pay bills on time, while non-white Americans and LGBTQ+ communities report higher levels of debt and significant anxiety over financial stability.

17. Working-age disabled people were nearly three times more likely to be classified as vulnerable with regards to their financial health. Just half (51%) of working-age people with disabilities said they were able to pay all of their bills on time, while close to half (46%) said they have unmanageable levels of debt. (Financial Health Network, 2023) 
18. Non-white Americans are more likely to have more credit card debt than emergency savings. Fifty-eight percent of Black Americans and 47 percent of Hispanic Americans say they have more debt than savings; just 30 percent of white Americans say the same (Bankrate, 2023) 
19. The top financial worries of LGBTQ+ Americans align with their top financial priorities with 43% saying that their top financial worry is getting out of debt (The Motley Fool, 2024)
20. Most often, job loss from physical injuries fall on the middle class causing bankruptcy because at an 18.7 percent interest rate, credit cards would allow them to get the things they need but also place them in debt that they were not able to pay (City University of New York, 2022)
21.  It is still the lowest-income households that have the overall highest ratio of credit card debt to monthly income. In fact, credit card balances are equal to 85%* of monthly income for these households. (Federal Reserve Bank of St. Louis, 2024)

Consumers are confused by credit card terms.

Consumer confusion over credit card terms is widespread, contributing to financial missteps and increasing debt. Nearly half of Americans are unaware of their credit card's annual percentage rate (APR), and a significant portion doesn't even know their interest rates or credit score, making it difficult for them to manage and minimize their debt effectively.

22. A recent study conducted by Ramsey Solutions showed that close to half of all Americans (47%), do not know the annual percentage rate (APR) that their credit card charges (The Motley Fool, 2024)
23. Of debt carriers, 43% say they don’t know the attached interest rates (Bankrate, 2023)
24. According to a new survey conducted by BadCredit.org, nearly one-third (31%) of Americans don’t know their credit score. So it shouldn’t be a surprise that Americans are having trouble applying for credit cards in the first place let alone using them effectively while minimizing debt. (Yahoo Finance, 2023)
    

Credit card debt is disrupting relationships and family dynamics

Credit card debt extends far beyond financial strain, impacting personal relationships, family dynamics, and overall well-being. For many, debt is a significant source of marital stress, with over half of surveyed Americans citing a partner’s debt as a major factor in divorce. Additionally, the psychological burden of debt can lead to increased depressive symptoms in parents, which in turn can result in harsher parenting practices and more significant behavioral issues in children, highlighting the far-reaching consequences of financial stress.

25. Over 1 in 3 Americans reported that credit card debt was a factor in separation from their spouse according to a survey by Debt.com (Money, 2024)