The champagne corks have popped, the gifts have been unwrapped, and now comes the inevitable reckoning. According to new research from Affirm and Talker Research, a staggering 70% of credit card users expect to carry a balance into 2026—a sobering statistic that underscores the financial stress many American households face as the new year begins.

Record Spending Meets Record Debt

The 2025 holiday shopping season shattered records. The National Retail Federation forecast that holiday spending would surpass $1 trillion for the first time in history, representing a 3.7% to 4.2% increase over 2024. Payment processors confirmed the surge: Mastercard reported spending up 3.9%, while Visa tracked gains of 4.2%.

But behind these impressive top-line numbers lies a troubling reality. American consumers are now shouldering record-high credit card debt that recently surpassed $1.14 trillion. The average credit card balance per consumer has climbed to $6,523, up 2.2% year-over-year according to TransUnion data.

"The gap in the economy is growing. While upper income Americans shell out for Coach bags and luxurious face creams, lower earners are increasingly funding the holidays with credit card and buy now pay later debt."

— David Swartz, Senior Equity Analyst at Morningstar

The True Cost of Holiday Spending

Perhaps most alarming is the timeline for repayment. According to the research, 18% of holiday shoppers expect to still be paying off their credit card purchases well into summer—June or later. Meanwhile, 28% of shoppers haven't even finished paying off last year's holiday purchases.

With credit card APRs remaining firmly above 22% on average despite the Federal Reserve's rate cuts, the math becomes punishing quickly:

  • A $3,000 holiday balance paid minimum payments only would take approximately 10 years to eliminate
  • The cardholder would pay over $4,000 in interest alone
  • Even aggressive repayment of $200/month would still result in over $500 in interest charges

The K-Shaped Recovery Deepens

The holiday spending data reveals the continuing bifurcation of the American consumer. Upper-income households demonstrated robust spending on luxury items, travel, and experiences. Lower and middle-income families, however, increasingly relied on credit to maintain holiday traditions.

This divide is showing up in delinquency data. Credit card delinquencies have climbed above pre-pandemic levels, with 7.05% of balances delinquent by 90 days or more. The stress is particularly acute in lower-income areas, where consumers have fewer financial cushions to absorb unexpected expenses.

January's Triple Threat

The timing of the debt hangover couldn't be worse. January typically delivers a financial triple threat to American households:

  • Holiday bills arrive: December credit card statements hit mailboxes just as the new year begins
  • Annual cost increases kick in: Insurance premiums, subscription renewals, and membership fees often reset in January
  • Heating bills peak: Energy costs reach their annual highs across much of the country during winter months

This confluence of expenses creates what financial advisors call "budget whiplash," forcing households to suddenly tighten spending after months of holiday generosity.

What's Different This Year

Several factors make the 2026 debt hangover particularly challenging:

Persistent inflation: While headline inflation has moderated, prices remain elevated across essential categories including groceries, housing, and healthcare. Consumers have less slack in their budgets to absorb additional debt payments.

Rate-cut disappointment: Many consumers expected aggressive Federal Reserve rate cuts in 2025 to translate into lower credit card APRs. Instead, card rates have remained stubbornly high as banks maintain wide margins.

Weakening job market: The labor market, while still healthy, has shown signs of cooling. Job openings have declined, and layoff announcements have increased in certain sectors, creating anxiety about future income stability.

The 2026 Credit Outlook

TransUnion's 2026 consumer credit outlook projects card balances to grow just 2.3% next year to approximately $1.18 trillion—the smallest increase in years outside of the early pandemic period. This slower growth sits on top of already elevated balances and a marked rise in delinquencies.

The moderation in balance growth may actually signal consumer stress rather than financial health. Exhausted credit lines and tightened lending standards are likely constraining growth more than improved financial discipline.

Strategies for Tackling the Debt Hangover

For the millions of Americans waking up to credit card statements this January, experts recommend several strategies:

  • Take inventory: Calculate your total holiday debt across all credit cards before creating a repayment plan
  • Consider a balance transfer: Cards offering 0% APR promotional periods can provide breathing room, though transfer fees apply
  • Prioritize high-rate debt: The avalanche method—paying minimums on all cards while directing extra payments to the highest-rate balance—minimizes total interest paid
  • Explore debt consolidation: Personal loans often carry lower rates than credit cards and provide fixed repayment timelines
  • Seek nonprofit credit counseling: Organizations like the National Foundation for Credit Counseling offer free or low-cost guidance

The Bottom Line

The 2025 holiday season may have delivered record retail sales, but the financial hangover will linger well into 2026 for millions of American households. With seven in ten credit card users carrying balances and APRs remaining at punishing levels, the new year's financial resolutions have never been more critical.

The good news: awareness is the first step toward improvement. For those committed to breaking the cycle, 2026 offers the opportunity to rebuild financial foundations—one payment at a time.