Got Debt? Did You Know Consumer Debt Has Reached an All-Time High?

U.S. Debt Crisis: Consumer Credit Cards and Federal Deficit Reaching Alarming Heights

According to a February 2025 report by the Federal Reserve Bank of New York, Americans held a record-high $1.21 trillion in credit card debt as of Q4 2024, representing a $45 billion increase during that quarter and a 7.3% rise from the previous year. Simultaneously, credit card delinquency rates have reached their highest levels since at least 2011, suggesting that Americans’ financial security is approaching critical status.

Recent years of inflation, rising interest rates, and increased living costs have forced many consumers to rely heavily on credit cards for necessities. “Stubborn inflation has shrunk a lot of Americans’ financial margin for error from slim to about none,” noted Matt Schulz, chief credit analyst at LendingTree, who predicts credit card debt records will continue to be broken.

A Debt.com survey of 1,000 American adults revealed troubling statistics: 32% had maxed out their credit cards, 37% regularly used credit cards just to make ends meet, and 44% reported inflation causing larger monthly balances. Among those maxed out, 80% said they would rely on credit cards during financial emergencies, with 23% owing more than $20,000 in credit card debt.

The Federal Reserve Bank of Philadelphia reported that the share of credit card accounts only meeting minimum payment requirements reached a 12-year high of 10.75% between July and September 2024. NerdWallet calculated that for households with revolving credit card debt (averaging $10,563 by September 2024), paying only minimum amounts would require 22 years and cost $18,000 in interest to eliminate the balance.

Geographically, Alaska leads U.S. states with the highest credit card debt at $9,255 per user, followed by Washington, D.C. ($9,215), Maryland ($9,047), New York ($8,920), and New Jersey ($8,803). At the city level, Santa Clarita, California tops the list with average household credit card debt of $22,753, though analysts note this partially reflects the area’s prosperity rather than financial distress.

In response to these trends, U.S. banks have adopted more conservative lending standards, with the Philadelphia Fed reporting “a measurable decline in new card origination commitments and higher origination credit quality.”

Compounding these individual financial struggles, federal debt will soon eclipse its all-time high of 106% of GDP, last reached after World War II. A Conference Board survey found that 51% of U.S. CEOs consider national debt and deficits the greatest economy-related geopolitical risk for their businesses.

Prominent business leaders have voiced concerns about this fiscal situation. JPMorgan Chase CEO Jamie Dimon stated, “These large deficits are not sustainable… the sooner we deal with it, the better.” Goldman Sachs CEO David Solomon identified government debt as his primary concern, while Citadel CEO Ken Griffin warned against “borrowing at the expense of future generations.” Bank of America CEO Brian Moynihan emphasized the need to balance the budget “like anybody, any company, any person, any household.”

Despite these challenges, policymakers have options available to improve the nation’s fiscal outlook, including comprehensive spending and revenue reforms proposed by the Peterson Foundation’s 2024 Solutions Initiative.​​​​​​​​​​​​​​​​