New research confirms what I’ve been saying for thirty years: most credit card debt isn’t the result of overspending on luxury items. It comes from ordinary people trying to survive with an income that does not cover basic costs.
If 73% of debt comes from keeping the lights on and fixing the car so you can get to work, the problem isn’t with your spending habits.–Steve Rhode
The numbers that matter
Academy Bank gathered data from the Federal Reserve, Experian, Bankrate, and other sources to paint a picture of U.S. credit card debt in 2026:
73%From Essentials
25.3%Median interest rate
Where the money actually goes
The research provides an overview of the causes of credit card balances:
- Car repair (your car breaks down, you charge it)
- Medical bills (insurance doesn’t cover everything)
- Home repairs (the roof doesn’t wait for your budget)
- Routine living expenses (groceries, utilities, gas)
Only 27% of balances come from discretionary spending – the things you actually buy to enjoy.
Who owes what
Every generation sees increases, but generation X carries the heaviest burden:
$5,595Overall average
7.1Tickets per adult
Generation They are caught between paying for children and helping aging parents.
The reimbursement crisis
This is what it’s about:
- 35% of people with a balance expect to carry it indefinitely
- 14% cannot consistently make even the minimum payments
- 46% of all cardholders carry a balance every month
If more than a third of people have given up on ever being debt-free, that’s not laziness. That’s math that doesn’t work.
What this actually means for you
If you have credit card debt, stop blaming yourself for things beyond your control. Medical emergencies happen. Cars break down. Inflation exceeded wages.
Instead, focus on what you can control:
- Stop the bleeding. If you cannot meet minimum amounts, please contact your card issuer. Many have hardship programs.
- Know your options. Credit card debt is unsecured. That means there are solutions — from negotiation to settlement to bankruptcy — that don’t exist for mortgages or car loans.
- Protect what’s important. Never cash out your pension to pay off your credit card debt. Your 401(k) is protected in bankruptcy. Credit cards are not worth your future.
- Look at the math. Sometimes the fastest way forward is not the one you expect. Take the Find Your Path quiz to see all your options.
To remind
- Debt is math, not morality
- 73% came from surviving, not spending
- You have more options than you think
Don’t
- Paying out a pension for credit card debt
- Ignore the problem (interest connections)
- Suppose there is only one way out
Key Takeaways
- $1.21 trillion in credit card debt – an all-time high
- 73% of balances come from essential expenses, not luxury expenses
- The average interest rate reached 25.3%
- 35% of balance sheet holders expect to carry debts indefinitely
- Gen X has the highest average balance at $9,600
- Credit card debt is unsecured: you have options that most people don’t know about
Frequently asked questions
Is credit card debt at an all-time high?
Yes. According to this study, total U.S. credit card debt is $1.21 trillion, while Federal Reserve data shows $1.233 trillion in the third quarter of 2025. Both figures are the highest since tracking began in 1999.
Why do people use credit cards for essentials?
Wages have not kept up with inflation. If your paycheck doesn’t cover a medical bill or car repair, you have two choices: put it on a card or don’t solve the problem. Most people choose to survive.
What is a good strategy for paying off credit card debt?
It entirely depends on your situation. If you can afford payments, the avalanche method (highest interest first) will save the most money. If payments are a problem, you should look at other options: hardship programs, settlements, or even bankruptcy for a fresh start.
Should I transfer balances to a 0% card?
Only if you can pay it off before the promotional period ends AND it won’t charge you more. Balance transfers buy time, but don’t solve the underlying math. If revenues minus expenses are negative, transferring balances only delays the problem.
Can credit card debt be discharged in bankruptcy?
Yes. Credit card debt is unsecured debt and can usually be completely eliminated in a Chapter 7 bankruptcy. This is one reason why I say you should never cash out your retirement to pay off credit cards: Your 401(k) is protected in bankruptcy, but once you spend it on credit cards, it’s gone.
(Source: Academy Bank via PR Newswire)
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