The new year has arrived with a sobering reality check for American households: debt levels have reached unprecedented heights, and for millions of families, the path to financial stability feels more distant than ever.

Data released Thursday by nonprofit credit counseling agency Money Management International revealed that average unsecured debt among its new clients climbed 5 percent in 2025 to exceed $32,600—with December marking the highest average unsecured debt the organization has ever recorded. The findings underscore a troubling pattern of financial stress that shows no signs of abating.

The Credit Card Debt Mountain

Americans now carry a staggering $1.233 trillion in credit card debt, according to the latest Federal Reserve data. That figure has surged 60 percent—by $463 billion—since bottoming out at $770 billion during the pandemic in early 2021.

Perhaps more troubling than the aggregate number is how that debt is distributed. A new Bankrate survey found that 47 percent of American credit cardholders are carrying a balance as of December 2025—essentially unchanged from a year ago but up from 39 percent in December 2021. The normalization of revolving debt appears nearly complete.

"Day-to-day expenses like groceries, childcare, and utilities are the second-leading cause of credit card debt at 33%—and this percentage is rising each year."

— Bankrate 2026 Credit Card Debt Report

A Generational Crisis

The debt burden cuts across demographic lines, but Gen X and Millennials are bearing the brunt. Both generations report that 53 percent of credit cardholders carry balances, compared to 43 percent of Boomers and 40 percent of Gen Z. These are the generations navigating peak earning years while simultaneously managing mortgages, childcare costs, and in many cases, student loan payments.

Who's Carrying Credit Card Debt

  • Gen X (ages 46-61): 53% carry balances
  • Millennials (ages 30-45): 53% carry balances
  • Boomers (ages 62-76): 43% carry balances
  • Gen Z (ages 18-29): 40% carry balances

Most concerning is how long Americans are carrying this debt. Bankrate found that 61 percent of those with credit card balances have been in debt for at least a year—up from 53 percent in 2024. This includes 31 percent who have been carrying debt for three or more years and 21 percent who have been in debt for five or more years.

When Emergency Becomes Everyday

The causes of credit card debt reveal a population stretched thin by both unexpected expenses and basic living costs. Emergency expenses remain the top driver at 41 percent, encompassing medical bills, car repairs, and home maintenance that Americans simply cannot cover from savings.

But the second-leading cause—day-to-day expenses at 33 percent—points to a more structural problem. When families are using credit cards to cover groceries, utilities, and childcare, they're not bridging a temporary gap; they're financing a lifestyle they cannot afford.

Housing costs have emerged as a primary culprit. The combination of elevated home prices, mortgage rates that remain historically high despite recent Fed cuts, and rental costs that have far outpaced wage growth has left households with less discretionary income to cover other expenses—or to pay down debt.

Pessimism About the Year Ahead

Perhaps the most alarming finding in recent surveys is how Americans expect their debt situation to evolve. A NerdWallet survey found that nearly half of Americans with revolving credit card debt—47 percent—believe that debt is likely to increase in 2026.

And 22 percent of those carrying credit card debt don't believe they'll ever pay it off completely—a level of financial hopelessness that carries implications far beyond individual balance sheets.

The Interest Rate Trap

For those carrying balances, the math is punishing. Average credit card interest rates remain above 20 percent, meaning a family carrying the typical $10,951 household balance is paying more than $2,000 annually just in interest—money that builds no equity and provides no utility beyond the privilege of continuing to owe.

The Federal Reserve's rate cuts in 2025 provided minimal relief, as credit card rates are determined more by risk assessment and issuer margins than by the federal funds rate. Until rates drop substantially—which the Fed has signaled won't happen quickly—high interest costs will continue to make escape from debt difficult.

What Experts Recommend

Financial advisors consistently emphasize a few key strategies for households struggling with debt:

  • Balance transfer cards: For those with good credit, 0% APR promotional periods can provide breathing room
  • Debt consolidation: Personal loans typically carry lower rates than credit cards
  • The avalanche method: Paying minimums on all debts while directing extra payments to the highest-rate balance
  • Nonprofit credit counseling: Organizations like MMI can negotiate lower rates and create structured repayment plans

But systemic solutions remain elusive. Until wages catch up with housing and living costs—or until those costs moderate—many American families will continue financing the gap with debt. The question for 2026 is not whether household debt will remain elevated, but how much higher it will climb.