Rising credit card balances are placing increasing financial strain on many Americans.
Credit card debt is placing increasing strain on millions of Americans, as rising interest rates collide with job instability and higher living costs. For many households, credit cards have shifted from short-term support to long-term financial pressure, with balances growing faster than incomes.
A 26-year-old South Carolina resident is among those caught in that squeeze. After losing a steady source of income during a government shutdown late last year, she fell behind on her credit card payments for the first time. Her total debt has since climbed to about $6,000, spread across three cards. Following missed payments, her lenders sharply increased interest rates—doubling one rate to 16% and raising another to 18%. She has since turned to freelance work for income, but says it barely covers basic expenses, let alone growing debt.
The surge in credit card interest rates has drawn the attention of President Donald Trump, who last week proposed a one-year cap of 10% on credit card rates beginning January 20. The plan is intended to provide relief to households struggling with record-high borrowing costs. The South Carolina resident said the proposal could help somewhat but would not eliminate her debt. “It might slow things down, but it won’t erase what I owe,” she said.
Average U.S. credit card interest rates reached about 22% in late 2025, up from roughly 13% a decade ago, according to Federal Reserve data. More than one-third of adults carry a balance, and total credit card debt in the U.S. now exceeds $1 trillion. Analysts say the figures reflect mounting pressure on consumers. “People are feeling squeezed, and that pressure isn’t going away quickly,” said a portfolio manager in Chicago.
Banks have pushed back strongly against the proposed cap, warning it could reduce access to credit. Industry leaders argue lenders would be forced to cut credit limits, close higher-risk accounts, or offset losses through higher fees. Credit card interest and related charges generated about $160 billion in revenue in 2024, making it a key profit driver for major lenders. Executives at several large banks have cautioned the policy could slow consumer spending and lead to legal challenges.
Some economists agree that a flat cap may not significantly help borrowers already in distress. They warn lenders could respond by restricting access for lower-credit-score consumers or shifting costs into annual and late fees. “It’s not clear people would be better off overall,” said a finance professor at Rice University.
Others argue banks have room to absorb lower rates. Research from Vanderbilt University estimates a 10% cap could save Americans roughly $100 billion a year in interest payments. Researchers say lenders could reduce marketing costs or scale back rewards programs instead of cutting credit access. “This is something households would notice immediately in their budgets,” said one of the study’s authors.
For another borrower, a 31-year-old mother, the proposal feels personal. She relied on credit cards to cover childcare costs while unemployed, accumulating about $6,700 in debt. Thanks to a special benefit program, her card carries a low interest rate, allowing her to manage repayments. Without that protection, she said childcare would not have been possible.
The idea of capping credit card interest rates has circulated in Washington for years and has drawn bipartisan interest. Lawmakers from both parties have previously introduced similar bills, though House leaders remain cautious, citing potential unintended consequences and strong resistance from the banking industry.
Whether the proposal becomes law remains uncertain. But the debate has highlighted a growing reality: for millions of Americans, credit card debt is no longer a convenience—it is a source of anxiety, instability, and difficult daily choices.