‘It’s a constant weight’: Americans struggle with record credit card debt | US economy

US credit card debt reached a record $1.17tn in the third quarter of 2024, growing from $770bn in the first quarter of 2021 and the share of active credit card holders making just minimum payments rose to 10.75%, the highest percentage ever in data going back to 2012.

The Guardian spoke with individuals around the US about their experiences and issues with credit card and other personal debt. They requested to remain anonymous for privacy concerns about personal finances.

Angela, a 42-year-old teacher in Virginia, explained she and her husband had struggled with paying off about $20,000 in credit card debt accrued mostly from paying medical bills not covered by her health insurance from infertility issues.

“The medicines, procedures, and travel all hit us hard,” she said. “It just piles up and it piles up and you have to miss a payment because something else in life happens, and or you don’t make the payment you want to make, and it just starts to kind of snowball on you.”

The debt has made it difficult to save anything and is always looming on her.

“It’s a constant weight in the back of my mind which clouds all my little joys,” said Angela. “With inflation, cost of living rising, and life, I have struggled to pay down the debt. We do less, stress about what we can spend on or can afford.”

A 54-year-old woman in Ohio said she lost her job in 2024 and was not approved for unemployment benefits because she was classified as a subcontractor, adding to debt she already had from medical bills and home repairs.

“I’m now unable to pay them, and I can’t find a job due to a tight market and most likely age discrimination,” she said. “My debt has escalated to the equivalent of half my typical annual income. This and the inability to find a job have left me with no choice but to remain in a very unhappy, toxic, romantic relationship.”

A 35-year-old software engineer in Los Angeles, California, said she accrued significant personal debt putting herself through engineering school at the age of 29, but despite making a salary of over $100,000 a year, she still struggles with paying it off and keeping up with bills.

“I’m now facing huge interest rates and can barely pay down principal balances,” they said. “Student loans only covered my rent. If additional student loans existed for people in situations like mine, I wouldn’t have needed to charge so much to my credit cards.”

This week the senators Bernie Sanders and Josh Hawley introduced a bill to cap credit card interest rates to 10% for the next five years, which Trump has claimed he would support. The average credit card interest rate is 28.6%, despite banks being able to borrow from the Federal Reserve at less than 4.5%.

About 82% of all US adults have at least one credit card, with the average about four credit cards per US consumer, according to Experian, and the average household has over $21,000 in credit card debt.

A 69-year-old retiree in Moody, Alabama, said she lived check to check on social security and has had no choice but to rely on credit card debt for food, bills and other living expenses.

“I am constantly stressed about money,” she said, adding it had created anxiety, depression and sleeping issues.

A 47-year-old teacher in Mesa, Arizona, said he had fallen into debt trying to provide for a family of four, and covering the funeral costs for the passing of his mother, even as he said he has been “working my car to the bone for gig work to pick up the slack”.

A 72-year-old in California said she only made a little over $1,200 a month from social security, but more than half of it went toward a debt consolidation payment.

“Money is always an issue with me, I’m currently keeping my debt at bay with loans out of what little I have for retirement, but still losing about half my monthly income to debt repayment that I wish I could be saving for a home.”

A 53-year-old in Connecticut explained he had fallen into significant credit card debt after losing his small business due to the pandemic shutdowns, from barely ever using credit cards to maxing out several, even after finding a job, which was difficult at his age.

“The pay was a fraction of what my business was pulling in and at this point, I maxed out the credit cards as I didn’t have a lot of credit on them to begin with. I have since taken out two personal loans and got a third credit card. All of them are maxed out,” they said. “I’ve gained 60lb, my hair has been falling out, and I can’t sleep more than four hours a night.”

Money owed on revolving debt grew 52.5% to $645bn, from a decade low of $423bn in second quarter 2021, according to a report by the Philadelphia Federal Reserve.

Twenty-three per cent of Americans with less than $25,000 annual income have no bank account. Forty-six per cent of Americans with annual incomes between $50,000 and $99,999 carried a credit card balance, while low-income Americans were more likely to predominantly use buy now, pay later, payday or pawn shop loans, with average annual interest rates of payday loans at 400%, with many much higher.

According to data from the US Federal Reserve, 6% of Americans used a payday loan in 2023, up 1% from 2022, with users more likely to be low-income, Black and Hispanic adults, and adults with a disability.

David, a 57-year-old gig worker and educator in Philadelphia, Pennsylvania, said he first took out a payday loan about six years ago when he lived in Oklahoma and had just started a new job and needed a loan to bridge the gap between paychecks.

He said he was offered more money for the loan than he asked for, and as he made payments, the lender frequently offered to extend him more credit.

“They report every late payment, every non-payment to the collection agencies, and I got into a merry-go-round, in over my head, and it wrecked my credit score,” said David. “There’s no negotiating, settling, or anything like that with payday lenders.”

He said the collection tactics included calling his place of employment, calling the references on his initial loan application, to demand payment from him, which continued to grow with high interest rates and added fees. The length of time and impact it had on him has given him major depression and suicidal thoughts, he said.

“They’re so predatory on very vulnerable people,” he added. “I can’t even get my own apartment without a co-signer. It’s just humiliating.”