WalletHub analyzed Federal Reserve data that was just released and found that credit card debt dropped by $61 billion to start the year, falling to $1.30 trillion in February 2025. Despite the average credit card APR decreasing due to the Fed's rate cuts last year, WalletHub projects that credit card debt will increase by $100 billion by the end of 2025. You can find additional takeaways from WalletHub’s latest Credit Card Debt Survey below.
- Tariff Concerns: Nearly half of Americans are concerned that tariffs will make their credit card debt worse.
- Rising Debt in 2025: 1 in 4 people say they will have more credit card debt by the end of 2025.
- Lack of a Plan: 46% of Americans don’t have a debt payoff plan.
- Inflation Is the Bigger Worry: Almost 3X more Americans are most worried about inflation compared to tariffs.
- No Trust in AI: Nearly 4 in 5 people don’t trust AI for information about managing their credit card debt.
- Support for Interest Rate Caps: 83% of Americans think the government should put a cap on credit card interest rates.
- National Debt in Worse Shape: Nearly 4 in 5 people say the country’s debt is in worse shape than their personal debt.
“Although credit card debt is trending downward, we definitely aren’t out of the woods yet. We still collectively owe well over $1 trillion, and 25% of people expect to have more debt by the end of the year, according to WalletHub research. To make matters worse, 46% of Americans don’t have a plan for paying off what they owe, and new technology doesn’t even figure to be much help, as nearly 4 in 5 people don’t trust AI for information about managing credit card debt. What people really need is a well-thought-out budget that maximizes debt payments. Instead, we’re hoping tariffs don’t hit us too hard and wishing for a federal interest rate cap.”
- John Kiernan, WalletHub Editor
5 Tips for Dealing With Credit Card Debt
- Separate your everyday expenses from your debt. When you carry a credit card balance from billing period to billing period, you lose your grace period for new purchases. That means interest starts applying to new purchases right away. But if you use one card for ongoing debt and another for everyday purchases that you can pay off by the due date, the everyday purchases should never accrue interest charges.
- Use a balance transfer deal to lower the cost of existing debt. The best balance transfer credit cards can give you a break from interest charges for as long as 24 months, and attractive offers are accessible to individuals with fair credit or better. A prolonged 0% introductory period can yield significant savings on interest, helping you get out of debt faster.
- Use a rewards card for everyday spending. You can save 1% to 2%+ on every purchase with the right rewards card. You might also save a couple hundred dollars with an initial bonus. And if you plan to pay the bill in full monthly, the interest rate won’t matter.
- Improve your budgeting and saving efforts. There are several good budgeting tools available to consumers for free or a low cost. For example, WalletHub’s free budgeting tools can help you get organized, set up your budget, and analyze your performance. Taking ownership of your budget can help you free up some room for emergency fund contributions and debt payments so you can get out of debt and stay there.
- Work to improve your credit score. People with higher credit scores tend to pay lower interest rates. For example, the average APR among credit cards for people with fair credit is 26.82%, while the average for people with excellent credit is 17.62%, according to WalletHub’s database of 1,500+ credit card offers. Having good or excellent credit also makes it easier to get credit cards with a 0% introductory APR.
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