5 Reasons Credit Card Debt Is Increasing — and What To Do About It
According to the Federal Reserve Bank of New York, credit card balances in the United States have gone up by $44 billion from Q3 2025 to Q4. The total now stands at $1.28 trillion.
So, why is credit card debt growing and what can consumers do about it? Based on an Achieve survey, here are five reasons why credit card debt is increasing.
Job Loss or Reduced Income
One in five consumers (20%) said they’ve fallen behind on credit card payments because they lost their jobs or have experienced an income reduction.
Consumers who are worried about lower incomes or who’ve been affected by recent layoffs could pursue a side gig or ask for more hours to pick up some of the slack. As a longer-term solution, saving up some extra money for emergencies — like layoffs — could also help.
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Forgetting To Pay
According to Achieve, 11% of consumers cite forgetting to pay their credit card bill as the main reason why their debt load is growing. This can be especially problematic since late fees and penalty APRs can add up. Missed payments can also hurt their credit score, which could lead to higher interest rates or unfavorable terms on any new loans or cards.
A potential solution is to set up direct deposit with your employer. Then, you can schedule automatic payments to come out shortly after your paycheck comes in. If your income schedule doesn’t match your credit card due dates, contact your card issuer to see if you can change when payments are due.
Increased Cost of Essential Expenses
Another 17% of consumers have seen rising credit card debt because of the higher cost of living.
Rising costs can be especially concerning for those on a fixed income or already strained budget. And when credit cards feel like the only way to make ends meet, it only exacerbates this strain.
Possible solutions here include setting a stricter budget, cutting out nonessentials (like monthly subscription plans) and choosing lower-cost alternatives to things like entertainment. You might also be able to get your monthly insurance premiums for things like car insurance lower by shopping around for a cheaper plan.
Didn’t Want To Pay
A small percentage of consumers — 5% — said they simply don’t want to pay their credit card bills.
To combat this, the first step is to stop using credit to pay for things. At the very least, this will keep your debt from growing as quickly. In the long term, paying off the existing debt is the only real solution as interest and late fees will continue to add to it otherwise.
If you don’t want to pay off your debt because it feels overwhelming, try tackling it in a new way. For example, you could employ the debt snowball method. This entails paying your smallest debt first (while making minimum payments on all other debts). Once you’ve paid off the first debt, you can move on to the next smallest one, and so on.
Paying off debt takes time, so be patient with yourself. And don’t forget to celebrate the small wins — like bringing one card’s balance down to zero, or even by half.
Difficulty Managing Cashflow
According to Achieve, 7% of consumers attribute their rising credit card debt to difficulty managing cash flow.
To help with this, take a look at your household income, expenses (including debts), and budget. Make some changes to your budget as needed to ensure you have more money coming in than you have going out.
If this isn’t working, you can always check into local, state or federal programs that can provide temporary financial relief. Some programs can help with utility payments, rent, mortgage or other needs.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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