Record High in Credit Card Debt: How to Avoid Falling Into the Endless Cycle

• Credit card debt in the U.S. rose by $27 billion in just three months, reaching $1.21 trillion and nearing an all-time high.
• Interest rates of 20% and minimum payments can trap families in debt for decades.
• More delinquencies among young people and calls to take action to stop over-indebtedness.

Debt grew by $185 billion in the second quarter, reaching $18.39 trillion, according to the New York Fed.

The biggest jump was in credit cards: an additional $27 billion in one quarter, reaching $1.21 trillion. Ted Rossman, an analyst at Bankrate, said the figure is “just below an all-time record.”

While an increase can reflect more spending and card usage, the problem comes when the balance is not paid in full.

Young people and the challenge of getting out of credit card debt

The Federal Reserve report shows that nearly 10% of balances held by young people between the ages of 18 and 29 are seriously delinquent (90 days or more).

• Late payment rates for those under 40 are unusually high, remaining at levels not seen since 2010.
• This group is the most vulnerable to getting trapped in endless payments, especially when they only make the minimum payment.

Direct impact on the Hispanic community

For Hispanics aged 25 to 50 in the U.S., credit card debt can reduce saving capacity, limit investments, and complicate financial emergencies.

If only minimum payments are made on an average balance of $6,371, the debt could take more than 18 years to pay off and add $9,259 in interest, according to TransUnion.

Tips for managing credit card debt

• 0% balance transfers: Cards such as the U.S. Bank Visa Shield offer 24 months with no interest on transfers and purchases. A $6,000 balance could be paid in $250 monthly installments with no interest.
• Credit counseling: If your credit score is low or you have multiple debts, a counselor can negotiate rates of 6% or 7% over 4–5 years.
• Extra payments: Paying more than the minimum each month reduces the principal and avoids accumulating interest.

What the experts say

Rossman warns: “Of course it’s not a good idea to go into credit card debt if it can be avoided. The average rate is 20%, but half of balances are paid in full each month, so those people are not really in debt.”

Federal Reserve researchers indicated they are closely monitoring the high delinquency rate among people under 40.

What to expect in the coming months

Experts expect debt to remain high, with the risk of delinquency increasing if the economy slows.

Banks could tighten requirements for opening new lines and be more selective with balance transfer offers.