America's Growing Credit Card Problem

Lower interest rates can’t come soon enough for most Americans.

Recently, the head of the Federal Reserve, Jerome Powell, hinted that interest rates might be cut soon. This news was a huge relief to investors, and as a result, the stock market soared. Many major stocks are now trading at their highest prices in almost a year.

It’s about time rates are being lowered, as many Americans are struggling to pay their bills. While the stock market is celebrating, everyday people are feeling the pressure.

The Financial Strain on Americans

First, let’s look at student loans. When the government recently resumed collecting payments on defaulted student loans, the percentage of loans that were more than 90 days late increased to 10.2%. Additionally, the amount of money Americans owe for student loans has increased significantly, now accounting for approximately 7.3% of their total income, compared to just 3% in 2003. This is making it much harder for people to afford other basic needs.

More importantly, people are struggling to pay off their credit card debt due to high interest rates. The percentage of credit card payments that are late just hit 12.3%. We haven’t seen a rate this high in over a decade, and it’s not far from the high point during the 2008 financial crisis. This shows that many Americans are barely getting by, using credit cards out of need, not just for convenience.

A survey from LendingTree found that one out of every four borrowers has used debt to buy groceries. The youngest consumers, aged 18 to 29, are the group with the highest incidence of late payments. This is a significant problem because it means young people are starting their adult lives burdened by debt, which could negatively impact their financial future for a long time.

It’s also concerning that car loan payments are becoming overdue more frequently, reaching a rate of 5%. This is close to the high of 5.4% seen at the end of 2010. Unlike with a credit card, if you miss a car payment, your vehicle can be repossessed. The fact that more people are risking this shows how financially stressed they are.

The one bit of good news is the housing market. The percentage of late mortgage payments has increased from 0.44% to 0.88%, which is still historically low. This suggests we are not heading for a massive housing crash like the one that caused the 2008 recession.

What This Means for the Future

Overall, it’s clear that high interest rates have hurt consumers. The average interest rate for new credit cards is a massive 24.4%. This makes it almost impossible for people to pay off their debt if they’re only making small payments. That’s why the news from the Fed was so welcome—lower interest rates will help many people climb out of this financial hole.

Unfortunately, even with lower rates, individuals with substantial debt will still face a significant challenge. However, it’s never too late to take control of your finances.

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Larry Marvin

LifeCrafter Money $ense

Sources

Mass market selloff amid August inflation report. https://www.msuwma.com/post/mass-market-selloff-amid-august-inflation-report

How to Transfer Your Credit Card Balance?. https://cardsinfo.net/how-to-transfer-your-credit-card-balance/

Goldman forecasts a record growth rise in credit card delinquencies in the USA. https://www.dailymanagementreview.com/Goldman-forecasts-record-growth-rise-in-credit-card-delinquencies-in-USA_a10340.html

Dr. David Eifrig and the Health & Wealth Bulletin Research Team, August 27, 2025

LifeCrafter.org. (2025). Gemini. https://gemini.google.com/app/f84041c46c538967

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Larry Marvin

Larry Marvin is a graduate of Eastern Michigan University and a veteran of the U.S. Air Force. His career spans over fifty years as a corporate trainer, medical administrator, small business owner, income management coach, and public speaker. He has conducted over 300 workshops, classes, and seminars during his years as a corporate trainer on such topics as budgeting, debt elimination, banking, saving plans, budgeting software, spreadsheets, and investing basics.Larry has conducted budgeting and debt elimination seminars at U.S. Steel and UAB Special Studies.
His passion is teaching and equipping people with the financial knowledge they need to act in the best interest of their money and family.

He is passionate about his faith, has been married to his wife for 54+ years, and has three adult children and fourteen grandchildren.

Larry Marvin is the co-founder and Executive Director of LifeCrafter Foundation.