By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
Next Gen Econ
  • Home
  • News
  • Personal Finance
    • Credit Cards
    • Loans
    • Banking
    • Retirement
    • Taxes
  • Debt
  • Homes
  • Business
  • More
    • Investing
    • Newsletter
Reading: Credit Card Balances Rise To Just Shy of New Record
Share
Subscribe To Alerts
Next Gen Econ Next Gen Econ
Font ResizerAa
  • Personal Finance
  • Credit Cards
  • Loans
  • Investing
  • Business
  • Debt
  • Homes
Search
  • Home
  • News
  • Personal Finance
    • Credit Cards
    • Loans
    • Banking
    • Retirement
    • Taxes
  • Debt
  • Homes
  • Business
  • More
    • Investing
    • Newsletter
Follow US
Copyright © 2014-2023 Ruby Theme Ltd. All Rights Reserved.
Next Gen Econ > Homes > Credit Card Balances Rise To Just Shy of New Record
Homes

Credit Card Balances Rise To Just Shy of New Record

NGEC By NGEC Last updated: August 5, 2025 9 Min Read
SHARE

Americans owe a near-record $1.209 trillion on their credit cards, according to the New York Fed’s latest Quarterly Report on Household Debt and Credit. That’s up $27 billion (2.3 percent) from last quarter and $67 billion (5.9 percent) from a year ago. The all-time record is $1.211 trillion from Q4 of last year.

Credit card balances have risen from the first quarter to the second quarter in 12 of the past 13 years; the only exception was 2020, when the COVID-19 pandemic disrupted just about everything. Balances usually fall from the fourth quarter of one year to the first quarter of the next (as they did this year), since Americans make New Year’s resolutions to pay down debt and many use tax refund money for debt payoff as well. In the second and third quarters, balances usually rise modestly before spiking in the fourth quarter thanks to holiday spending.

What’s happening with credit card balances in 2025

This year seems likely to follow the typical pattern, even as considerable uncertainty weighs on consumers’ minds (regarding tariffs, recession worries, a high cost of living and so on). A prominent theory continues to be that hard data (measurements of consumer spending, economic growth and the job market) is outpacing soft data (surveys of how consumers feel about financial issues).

It’s important to point out that the New York Fed’s report tallies Americans’ credit card balances at a moment in time (typically their statement dates) and does not distinguish between credit card bills that are paid in full (thereby avoiding interest) versus cardholders who carry debt from month to month at an average interest rate of 20.13 percent.

Bankrate’s latest Credit Card Debt Survey revealed that 46 percent of cardholders carry debt from month to month, while 54 percent pay in full. For the latter group, credit cards represent a great way to earn rewards on everyday purchases and access buyer protections such as extended warranties and travel insurance. But for the balance carriers, credit card debt can be a tough hole to dig out of.

Rising balances aren’t all bad

Rising credit card balances can indicate rising credit card debt, but not necessarily.

Credit card balances can be expected due to population growth, economic growth and the continued migration from cash to digital payment methods such as credit cards. In other words, perhaps balances have gone up because people feel comfortable spending more. At the household level, it’s important to pay your credit cards in full each month if at all possible.

TransUnion says the average credit card balance is $6,371. If you only make minimum payments at the average rate of 20.13 percent, you’ll be in debt for 217 months (more than 18 years) and will end up paying $9,259 in interest (plus the $6,371 you charged in the first place).

How to pay off credit card debt

First, don’t be ashamed — you have plenty of company. And credit card debt usually has practical causes (medical bills, car repairs, home repairs and day-to-day expenses). But it’s probably your highest-cost debt, so it’s one to prioritize. Here’s how to do it.

Balance transfer cards

Consider moving your high-cost credit card debt over to a new card with a generous 0 percent balance transfer promotion. The longest offer on the market right now is U.S. Bank Shield™ Visa® Card’s 24 months with 0 percent interest on balance transfers and new purchases. After that, the variable APR becomes 17.74% – 28.74% Variable, depending on the cardholder’s creditworthiness. Also note the transfer fee (5 percent or $5, whichever is greater).

Remember that minimum payment scenario involving the average credit card balance and the average interest rate? Well, instead of lugging around your debt for more than 18 years at a total expense of more than $15,000 (including principal and interest), you could pay about $265 per month to knock out the average balance ($6,371) within two years — including the transfer fee and avoiding all interest, thanks to a 24-month balance transfer promotion.

Nonprofit credit counseling

A solid backup plan, especially if you have a lower credit score (below, say, 680) or a lot of credit card debt (more than $6,000 or so), is nonprofit credit counseling. Reputable agencies such as Money Management International and GreenPath offer debt management plans along the lines of a 6 percent interest rate over five years. They charge nominal fees (for example, a $50 set-up fee and a $25 monthly fee) and can help you pay off your debt much more cost-effectively than that minimum payment scenario.

Up your income and cut your expenses

Any additional levers you can pull to increase your income and reduce your expenses can accelerate your debt payoff strategy. For example, about a quarter of U.S. adults have a side hustle, according to Bankrate’s 2025 Side Hustle Survey. Among them, they’re bringing in an average of $885 extra per month. If you were to put all of those funds toward the average credit card balance, you could pay it off in just over seven months.

I also suggest taking a hard look at your spending to find places to cut back. You don’t have to do this forever, but living more frugally for six months or a year could make a big difference to your financial situation. Cancel little-used subscriptions, eat out less often, discover cheaper entertainment options and so on.

The bottom line

Credit card balances are back on the rise after declining slightly in the first quarter of 2025. There’s an industry saying that credit cards can be like power tools — that is, really useful or incredibly dangerous, depending on how you use them. This report illustrates that sentiment perfectly.

If you pay your credit cards in full each month, you avoid interest and benefit from rewards and other conveniences. You don’t have true debt (even though your balances are counted toward the aggregate). But if you are carrying pricey credit card debt from month to month, forget about rewards for now and follow practical steps to pay off that debt once and for all. Get out of debt first, then chase rewards later on (since it doesn’t make sense to pay 20 percent in interest just to earn a few percentage points in cash back or travel rewards).

Have a question about credit cards? E-mail me at [email protected] and I’d be happy to help.

The information about the U.S. Bank Shield™ Visa® Card has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer.

Did you find this page helpful?

Why we ask for feedback
Your feedback helps us improve our content and services. It takes less than a minute to
complete.

Your responses are anonymous and will only be used for improving our website.

Help us improve our content


Thank you for your
feedback!

Your input helps us improve our
content and services.

Read the full article here

Sign Up For Daily Newsletter

Be keep up! Get the latest breaking news delivered straight to your inbox.

By signing up, you agree to our Terms of Use and acknowledge the data practices in our Privacy Policy. You may unsubscribe at any time.
Share This Article
Facebook Twitter Copy Link Print
What do you think?
Love0
Sad0
Happy0
Sleepy0
Angry0
Dead0
Wink0
Previous Article 6 Assisted Living Fees That Aren’t Disclosed Until It’s Too Late
Next Article How Much Should I Have in My 401(k) at Age 35?
Leave a comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

FacebookLike
TwitterFollow
PinterestPin
InstagramFollow
TiktokFollow
Google NewsFollow
Most Popular
9 Passive Income Ideas That Are Actually Passive (And Work After 60)
August 5, 2025
How Much Should I Have in My 401(k) at Age 40?
August 5, 2025
Are Those Brokerage Senior “Bonus” Offers Actually Costing More Than They Save?
August 5, 2025
What Age Do Most Americans Take Social Security?
August 5, 2025
10 Quiet Laws That Can Block You From Accessing Your Own Money
August 5, 2025
How Much Should I Have in My 401(k) at Age 35?
August 5, 2025

You Might Also Like

Homes

Types Of Car Loans: Which Is Right For You?

11 Min Read
Homes

What Is a Collision Deductible Waiver?

14 Min Read
Homes

Whole Life Insurance | Bankrate

18 Min Read
Homes

SBA 7(a) Loan: What It Is And How To Apply

12 Min Read

Always Stay Up to Date

Subscribe to our newsletter to get our newest articles instantly!

Next Gen Econ

Next Gen Econ is your one-stop website for the latest finance news, updates and tips, follow us for more daily updates.

Latest News

  • Small Business
  • Debt
  • Investments
  • Personal Finance

Resouce

  • Privacy Policy
  • Terms of use
  • Newsletter
  • Contact

Daily Newsletter

Subscribe to our newsletter to get our newest articles instantly!
Get Daily Updates
Welcome Back!

Sign in to your account

Lost your password?