In 2025, the relationship between Americans and their credit cards is strained. Prices have cooled, wages have plateaued, and yet credit costs haven’t budged. For millions of households, the small plastic rectangle in their wallet has turned into an expensive lifeline.
According to LendingTree, the average annual percentage rate (APR) on new credit card offers stands at 24.19 %, while cards already accruing interest average 22.83 %. Even when you include inactive accounts, the overall average remains above 21 % — the highest sustained level since the Federal Reserve began tracking the data.
Those rates bite. A balance of $3,000 at 23 % APR costs roughly $690 per year in interest alone — assuming no new spending. With inflation eating away at disposable income, fewer households can pay in full each month, creating a slow-burn debt spiral.
Federal Reserve data confirm the stress: 3.05 % of credit card loans at U.S. commercial banks were delinquent in early 2025 — meaning more than 30 days past due.
Other measurements paint an even sharper picture. WalletHub reports a charge-off rate — debt considered uncollectible — of 4.31 % in Q2 2025, while PYMNTS found that 90-day delinquencies jumped by 8.5 % between late 2024 and early 2025.
The St. Louis Fed adds another worrying layer: delinquency rates have climbed across nearly every ZIP code group, reaching about 14.1 % in early 2025. The pattern is clear — rising across income levels, but steepest among low-income households.
Why credit remains so expensive
So why are rates still sky-high while central banks hint at cuts? Part of the answer lies in risk premiums. Credit card debt is unsecured; when defaults rise, lenders widen their profit margins to offset potential losses.
The Philadelphia Fed reports that general-purpose card purchase APRs averaged 24.62 % in early 2025, while private-label store cards — the kind offered at retail chains — carried a staggering 31.15 % average.
Even if the Federal Reserve lowers its benchmark rate, these spreads don’t vanish overnight. Issuers remain cautious, especially after multiple quarters of elevated charge-offs. Meanwhile, regulatory debates about capping interest rates — some proposals in Congress suggest 10 % ceilings — add uncertainty that keeps lenders defensive.
The human reality
Behind every statistic is a household deciding which bill not to pay. According to Bankrate, nearly 64 % of cardholders carrying debt say it has delayed other financial goals — from home ownership to saving for emergencies.
The New York Fed adds that total credit card balances dipped by $29 billion in early 2025 but remain at an enormous $1.18 trillion, nearly 15 % higher than before the pandemic.
What’s more, store cards — which often promise discounts at checkout — now trap consumers with rates above 30 %, per Bankrate’s 2024–25 retail card survey. Many cardholders pay more in interest than the value of any rewards they earn.
Borrowing smarter in 2025
Experts agree: the simplest path to survival is also the oldest — pay off your balance in full each month. But for those already in debt, the priority should be to target the highest-interest balances first, avoid new spending on high-APR cards, and consider temporary balance-transfer offers (after checking for fees and post-intro rate spikes).
Financial counselors also urge consumers to maintain a credit utilization ratio below 30 %, which protects their credit score and reduces risk of limit cuts. For struggling borrowers, contacting the issuer early can open hardship programs or interest-rate relief.
And above all: don’t chase rewards if you’re paying double-digit interest. In 2025, the best “reward” is staying out of revolving debt altogether.