This decade’s historically high inflation rate has pushed more Americans to use credit cards to pay the bills — and many are now delinquent on their payments. If these trends continue, it could bode ill for both personal finances and the U.S. economy, experts say.
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The average U.S. credit card debt per borrower rose to $6,371 during the first quarter of 2025, according to TransUnion‘s latest credit industry insights report. That represents a 26% increase from an average of $5,026 during the first quarter of 2022, when inflation was headed for its highest rate in four decades.
GOBankingRates unpacks what these findings mean for Americans’ wallets and the economy.
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Debt Keeps Growing, But at a Slower Rate
On the bright side, the 2025 average credit card debt was up only 2.5% from a year earlier — a slowdown from the annual increases reported in 2024 (8.5%) and 2023 (14%).
Total balances across all consumer credit products — including mortgage, auto and personal loans — rose by about 28% from Q1 2020 to Q1 2025. However, when adjusted for inflation, balance growth was closer to 3%. The TransUnion analysis also found that inflation-adjusted balances for consumers declined in real dollar terms across the majority of credit risk tiers from 2020 to 2025.
These are positive signs in terms of the rate of debt growth. But it’s still worrying that Americans continue to pile up debt in an otherwise decent economic environment where wages are rising and unemployment remains low.
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‘Increased Reliance’ On Credit
“As consumers grapple with rising costs and high interest rates, recent studies have revealed an increased reliance on credit products to help make ends meet,” TransUnion noted.
This has been a particular problem for subprime borrowers, according to Michele Raneri, a TransUnion vice president and head of U.S. research and consulting.
“This demographic has likely felt the impact of higher costs most acutely,” Raneri said in a press release. “But for other risk tiers of borrowers, their card balance growth has been less than the rate of inflation, indicating that many consumers may have further borrowing capacity.”
More Delinquencies Equals Higher Recession Risk
Subprime and low-income borrowers are also more likely to be delinquent on their credit card payments, according to a recent report from the Federal Reserve Bank of St. Louis (FRED).
That report, released on May 9, found that the share of people 30 days delinquent on their credit card debt has “trended upward” since the first half of 2021. But it’s more notable in the lowest-income areas than in the highest-income areas. Between the second quarter of 2021 to the first quarter of 2025, their delinquency rates grew by 63% and 44%, respectively.
While the pace of delinquency rate growth has slowed since the start of 2024, the fact that it continues to grow at all could signal trouble in the months ahead.
“Delinquency rates, including credit card delinquency rates, may anticipate recessions and provide insight into future U.S. economic conditions,” the FRED report noted.
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This article originally appeared on GOBankingRates.com: Average Credit Card Debt Is Up By More Than a Quarter: What That Means for Americans’ Wallets and the Economy
