US credit card debt hits $1.25 trillion as new rates exceed 23%
Experts advise borrowers to negotiate lower rates or utilise balance transfers, noting that over 80% of rate reduction requests succeed.
US credit card balances reached $1.25 trillion in the first quarter of 2026, according to data released by the New York Fed. The figure marks a reversal from the seasonal decline observed in the preceding quarter, adding to household budget pressures amid ongoing inflationary costs for essentials such as groceries and fuel.
The cost of carrying this debt has also intensified. The average interest rate on new credit cards has risen to 23.7%, a level that financial experts warn can make even modest balances difficult to pay down as interest compounds.
With rates at these levels, experts suggest that borrowers should first attempt to negotiate lower interest charges directly with their issuers. Matt Schulz, LendingTree’s chief credit analyst, told Good Morning America that too few consumers make this request, despite survey data from LendingTree indicating that more than 80% of cardholders who ask for a reduction succeed.
For those who qualify, balance transfers to cards offering 0% introductory interest rates present another viable strategy. However, experts caution that these tools require strict adherence to terms, including fee structures and expiration dates, to avoid negating the potential savings.
Finally, borrowers are advised to adopt a structured payoff plan. Strategies typically involve either targeting the highest-interest debt first to minimise cost, or paying off the smallest balances to build momentum. The primary objective is to prevent balances from drifting while inflation continues to squeeze disposable income.
This report was originally published on Barchart.com by Caleb Naysmith.
