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Americans are leaning more on credit card debt as inflation stretches their budgets. Outstanding credit card balances jumped to $1.23 trillion in the third quarter according to the New York Federal Reserve’s running tally, up 6% over the same time last year and an all-time high.
With forecasts showing Americans plan to ramp up holiday spending this year, that burden is set to grow. Between gifts, travel costs, and groceries for festive meals, the winter holidays are the splurgiest time of the year for many Americans. And our collective end-of-year debt burden tends to reflect that. “What we see is a big jump in credit card balances across consumers in Q4,” said Charlie Wise, head of global research at TransUnion.
He said we get more financially disciplined in the new year and usually pay that extra debt down by the end of the first quarter. “It’s a typical cycle that we see absolutely every year,” Wise said.
But in 2026, consumers could have a tougher time managing that holiday spending hangover, said Ted Rossman, an analyst with Bankrate. “The problem is that a lot of people already have a lot of credit card debt,” he said. Rossman said low-income Americans especially are carrying bigger balances heading into the holiday season just to cover essentials. “Just think about how much everything else in our lives has gone up. Your rent payment is up, your grocery bill is up, utilities, insurance, all these other things,” he said.
There will be less fat to trim in household budgets come January, Rossman said, so it could take longer to catch up. And Chi Chi Wu, an attorney with the National Consumer Law Center, said the rise of buy now, pay later lending adds extra risk.
“We see consumers sometimes get into trouble when they think, ‘oh, well I can deal with this payment for this one buy-now-pay-later loan to buy this item,’” she said. Next thing they know, they’re juggling multiple “pay-in-four” installment plans for their whole shopping list and their plane ticket home. | 
