American credit card debt reached $1.209 trillion in the second quarter of 2025, marking a significant milestone in consumer borrowing patterns. While this represents a record in nominal terms, it remains below the inflation-adjusted peak from 2007’s pre-recession high. The surge reflects ongoing economic pressures: persistent inflation squeezing household budgets, elevated interest rates averaging 22% that make existing balances costlier to service, and the gradual depletion of pandemic-era savings cushions that once provided financial breathing room.
The Numbers Behind the Debt Surge
Generational patterns reveal who’s driving the borrowing boom across America.
Generation X now carries the heaviest load at $9,600 average per cardholder, up $2,600 from just three years ago. Millennials have surpassed baby boomers with $6,961 in average balances compared to boomers’ $6,795. Meanwhile, younger generations continue accumulating debt while older Americans pay theirs down.
The trajectory has been swift: total balances have jumped 57% since hitting a pandemic low of $770 billion in early 2021, when stimulus payments and reduced spending opportunities allowed many households to pay down debt.
Geographic Debt Divide Widens
Six states now average over $9,000 per cardholder, while regional disparities grow.
New Jersey leads the nation with average balances of $9,382 per cardholder as of Q1 2025, followed by Maryland at $9,252 and Connecticut at $9,201. All six states exceeding $9,000 cluster in high-cost regions, predominantly coastal areas. Mississippi sits at the opposite extreme with $5,221 average balances.
Year-over-year growth tells an uneven story: Georgia saw balances explode 20.5% from $6,592 to $7,943, while Louisiana bucked the trend with an 8.4% decrease. These variations suggest regional economic conditions—from job markets to housing costs—significantly influence borrowing behavior.
Warning Signs and Recent Shifts
Delinquency rates climb while recent data suggests borrowing may be cooling.
Elevated delinquency rates of 4.4% signal growing payment stress among cardholders, though levels remain well below Great Recession peaks. More encouraging: Federal Reserve data shows revolving credit actually contracted at a 5.5% annual rate in August 2025, suggesting consumers may be pulling back from new borrowing or aggressively paying down existing balances.
This reversal, if sustained, could indicate households are adapting to the higher-rate environment by prioritizing debt reduction over new purchases. The sustainability of current debt levels ultimately hinges on factors beyond individual control: whether interest rates decline, inflation moderates, and wage growth outpaces price increases during these hard times.
