Rising debt levels prompt increased credit card usage among consumers
In the second quarter of 2025, total U.S. consumer debt reached a staggering $17.86 trillion, with a notable surge in subprime credit card debt. The total dollar amount of subprime bankcard debt has increased by 135% since 2021, reaching $233.1 billion.
Subprime borrowers, those with lower credit scores, now hold 22.1% of all bankcard debt, a 3.5 percentage point increase over the past year and 50.9% since May 2021. This surge, according to experts, is driven by several factors. Elevated borrowing by subprime consumers as they compensate for strained finances post-pandemic, a broader rise in consumer spending driving up overall debt despite economic challenges, and an increasing reliance on credit cards among subprime groups.
The pattern reflects a "K-shaped" recovery, where subprime consumers are increasingly reliant on credit cards amid constrained financial conditions, while the overall consumer debt landscape shows continued spending but with diverging credit health. Despite these rising balances, overall delinquency rates have held steady, indicating many borrowers are still meeting payments.
The delinquency rate on subprime borrowers' bankcard debt, however, may be rising, although the latest data is not available. The overall delinquency rate on consumer debt remained flat at 1.5% in June.
Tom O'Neill, Market Pulse advisor at Equifax, noted a growing disparity in the consumer landscape. The increased share of credit card debt held by subprime borrowers is causing concern.
Meanwhile, student loan delinquencies spiked sharply following the end of a years-long reporting pause. However, student loan debt stood at $1.33 trillion in June, down 11% from a year earlier. Severe delinquency rates (loans 90+ days past due or in bankruptcy) for student loans soared from 6.48% in March to 17.95% in June.
On the other hand, the number of active student loan accounts dropped by 15.6% to 146.7 million in June, while the number of bankcard accounts increased by 5.7% to 581.6 million in the same period. Total bankcard balances rose by 4.2% year-over-year to $1.07 trillion in June. Bankcard delinquency rates dropped by 4.4% year-over-year to 2.79% in June.
This trend of subprime debt growth is a cause for concern, as it indicates a potential vulnerability in the consumer credit market. As the economy continues to recover from the pandemic, it will be crucial to monitor this trend and the financial health of subprime consumers.
[1] Federal Reserve Bank of New York. (2025). Household Debt and Credit Report. [2] Equifax. (2025). Market Pulse: U.S. Consumer Credit Trends. [3] TransUnion. (2025). Industry Insights Report: Credit Card Delinquency Trends.
Business analysts and finance experts are closely monitoring the surge in subprime credit card debt among consumers with lower credit scores. The increasing reliance on credit cards among subprime groups, as they cope with strained personal-finance post-pandemic, has caused a growing concern for potential vulnerabilities in the consumer credit market. According to reports from the Federal Reserve Bank of New York, Equifax, and TransUnion, this trend could signal a key issue in the recovering economy.
