US credit card debt hits $1.26 trillion as delinquencies jump to 12.8%

US credit card balances rose $21 billion to $1.26 trillion in the second quarter, up 1.7 percent from the prior quarter and nearing last year's all-time high of $1.28 trillion, as late-stage delinquencies jumped to 12.8 percent from 7.6 percent.

"To us it reflects this K-shaped economy," the New York Fed researchers said on a press call Tuesday. "There are a lot of households that live paycheck to paycheck."

The percentage of credit card balances more than 90 days past due jumped to 12.8 percent from 7.6 percent in the second quarter, prompting concerns that Americans are falling behind on debt payments at rates not seen since the Great Recession. New credit card delinquencies held steady but remain elevated, with 6.97 percent of balances transitioning to delinquency over the past year. About 175 million Americans hold credit cards, and roughly 60 percent carry revolving debt, leaving them more financially vulnerable.

The data shows households are increasingly using credit to extend budgets as inflation persists. More than half — 55 percent — of consumers carry credit card balances to cover essential expenses, according to a separate report by debt management company Achieve. Among respondents in Achieve's June survey of 2,000 consumers, 56 percent of borrowers said it would take six months or longer to pay off all their credit card debt.

"The rise in credit card debt, HELOC debt and other debts, which include personal loans, clearly show that people are looking for ways to extend their budget in the face of stubborn inflation," said Matt Schulz, chief credit analyst at LendingTree. Home equity lines of credit and home equity loans have accounted for a larger share of borrowing this year, other reports also show.

90-Day Delinquencies Hit 12.8% — Highest Since the Great Recession

The New York Fed researchers cautioned that the late-stage delinquency figure is a lagging indicator reflecting past charge-off debts that remain on credit reports. New credit card delinquencies have held steady — although they "remain at elevated levels, a trend we'll continue to monitor," the researchers said. The last time late-stage credit card delinquency rates approached current levels was during the 2008 financial crisis, when unemployment peaked at 10 percent and household balance sheets contracted sharply.

The pattern mirrors trends north of the border. Equifax Canada's Q2 2026 Market Pulse report showed total Canadian consumer debt rose to $2.68 trillion, up 4.18 percent year-over-year, with credit card balances growing to $134.2 billion. The national 90-day non-mortgage delinquency rate in Canada improved slightly to 1.76 percent, but mortgage holders in Ontario continue to show strain, with 90-day missed payments rising every quarter for the past four years. First-time homebuyers in Canada are increasingly relying on co-borrowers, with joint mortgages rising from 57.6 percent in 2016 to 70.9 percent through Q2 2026.

Households Brace for Sustained Credit Pressure

The divergence between consumers who pay balances in full and those carrying revolving debt is widening. While 65 percent of Canadian credit card holders pay their balances in full each month, the New York Fed data shows roughly 60 percent of US cardholders carry revolving debt. A recent Equifax Canada consumer survey found 25 percent of respondents expect to make only minimum payments in coming months, while another 7 percent believe they are likely to fall behind.

"Short-term debts often start off as a temporary stop-gap solution to household budget gaps," said Brad Stroh, co-founder and co-CEO of Achieve. "With elevated costs of living and compounding interest charges, these debts can quickly create sustained pressure on household balance sheets and budgets."

The trajectory of consumer credit will depend on whether inflation continues to moderate and whether the labor market holds. If households continue to rely on credit to cover essentials, delinquency rates could keep climbing toward levels last seen during the 2008 financial crisis. The New York Fed's next quarterly household debt report is scheduled for November. Readers should verify the latest figures against the official New York Fed and Equifax Canada releases, as data is subject to revision.

This content is for informational reference only and does not constitute professional advice.