Credit Card Balances Expected to Rise by Minimal Margin in 2026, Marking Slowest Growth in Decade

Credit card balances in the United States are projected to grow by only 1.8% in 2026, the slowest annual increase in over a decade. This follows a 3.2% rise in 2024 and a 4.1% increase in 2023, indicating a sustained deceleration in consumer credit expansion. The modest growth is attributed to higher interest rates, elevated inflation pressures, and reduced consumer willingness to carry balances beyond minimum payments. The Federal Reserve’s ongoing monetary tightening cycle, with the benchmark federal funds rate held at 5.25%–5.50% since 2023, has contributed to rising minimum payments and increased borrowing costs. As of November 2025, the average credit card interest rate stood at 22.4%, up from 18.1% in early 2022. These conditions have prompted many borrowers to prioritize debt reduction over new purchases, reducing revolving credit usage. Data from the Federal Reserve Bank of New York’s Consumer Credit Panel shows that the share of cardholders carrying a balance above $10,000 declined to 12.3% in Q3 2025, down from 14.7% in 2023. Meanwhile, the proportion of consumers with zero balances rose to 38.6%, the highest level since 2019. These shifts signal a broader behavioral shift toward financial caution among U.S. households. The implications extend to financial institutions, particularly large credit card issuers such as Bank of America (BAC), JPMorgan Chase (JPM), and Capital One (COF), which rely on interest income from outstanding balances. Slower balance growth may constrain net interest margins, though steady payment volumes and lower default rates—currently at 2.9%, near historic lows—help offset some risks.