US credit card debt hits $1.26 trillion as delinquency rates climb
Total household debt fell to $18.8 trillion, but credit card balances surged by $21 billion to $1.26 trillion in the second quarter of 2026, reflecting pressure from inflation and near 21% interest rates.
Credit card balances in the United States have risen to $1.26 trillion, a $21 billion increase from the previous quarter, according to the Federal Reserve Bank of New York’s quarterly report for the second quarter of 2026. The figure, which represents a 1.7 per cent rise, is nearing the record high of $1.28 trillion reached in 2025. This surge in revolving debt occurred even as total household debt decreased by $13 billion to $18.8 trillion during the same period.
The escalation in credit card borrowing is largely attributed to high interest rates, which have climbed from an average of approximately 15 per cent in 2021 to nearly 21 per cent currently. These financing costs are compounding the pressure on household budgets caused by rising prices for essentials. The Consumer Price Index rose 3.4 per cent over the 12 months ending July 2026, with the energy index increasing by 14.7 per cent and the food index up by 3 per cent.
Late-stage delinquency rates for credit cards have also deteriorated significantly. Balances more than 90 days past due increased from 7.6 per cent in the third quarter of 2022 to 12.8 per cent in the first quarter of 2026. While delinquency rates across most other debt products remained stable over the past two years, new delinquencies for auto loans and credit cards remain at elevated levels, prompting continued monitoring by Fed researchers.
Consumer behaviour data suggests that many borrowers are using credit to cover essential living expenses rather than discretionary spending. A survey by Achieve indicates that more than half of American consumers carry credit card balances to cover the rising cost of essentials, with 25 per cent carrying these debts for six months or longer. Additionally, data from Bank of America shows that nearly a quarter of all households were living paycheck to paycheck last year.
The combination of higher interest rates and tighter household budgets has created what economists describe as a dangerous debt spiral. Fed researchers warned that Americans are falling behind on debt payments at rates not seen since the Great Recession. With inflation data showing easing expectations for interest rate hikes and stock futures rising on recent economic reports, the immediate pressure on markets has eased, but the structural strain on consumer credit remains a critical concern for financial stability.
