US credit card debt hits $1.26 trillion as K-shaped economy deepens
Total American credit card balances have risen to $1.26 trillion, with new data revealing a stark divide between high-income consumers carrying lifestyle debt and lower-income groups facing reduced credit access.
Total US credit card balances have climbed to $1.26 trillion, up from $1.21 trillion in the second quarter of 2025, according to the New York Fed. The increase brings the total close to the all-time peak recorded in late 2025, following a steady rise from $770 billion at the start of 2021. While the rate of growth has moderated, the cumulative effect of this debt has stacked up significantly for many households.
The current landscape reflects a distinct K-shaped economic divide. Higher-income consumers are increasingly willing to carry balances to fund lifestyle goals, benefiting from robust credit availability and sign-up bonuses. In contrast, lower-income consumers often accumulate debt out of necessity or face outright cutbacks in credit access, creating a bifurcated market where financial resilience varies sharply by income level.
Average consumer credit card balances have also edged up, rising from $6,618 in 2025 to $6,659, according to Experian data. However, regional disparities remain pronounced. LendingTree data from the first quarter of 2026 identifies New Jersey, Connecticut, and the District of Columbia as having the highest average balances, at $9,733, $9,645, and $9,511 respectively. These states correlate with higher average incomes and costs of living, suggesting that greater credit limits allow affluent borrowers to run up larger debts.
Conversely, states such as West Virginia and Mississippi report the lowest average balances, at $4,847 and $5,005. West Virginia recorded the largest year-over-year drop in credit card debt at 15%, while New Mexico saw an 11.5% reduction. Analysts suggest these declines may result from consumers paying down debt in a challenging economy, or from issuers closing cards and reducing limits for borrowers with lower credit scores.
Methodological differences between data providers also influence these figures. While LendingTree’s anonymized user reports place New Jersey at the top, Experian’s sampling of its consumer credit database previously identified Alaska as having the highest average balance at $7,760. Despite these variations, both sources agree that higher-cost and higher-income states generally carry above-average debt levels.
For investors and policymakers, the data underscores that credit availability remains a key driver of household leverage. As issuers tighten reins on lower-credit borrowers, the debt burden may shift further toward those with the means to carry it, potentially insulating the broader credit market from immediate default risks while leaving lower-income groups more vulnerable to economic shocks.
