Americans’ Credit Card Debt Surges: Why Rising Spending Signals Economic Stress

By Marcus Liu

A top economic adviser to President Donald J. Trump has publicly celebrated a surge in Americans’ credit card spending, calling it “through the roof.” But economists and financial experts warn the trend reflects growing economic strain—not confidence—as households grapple with inflation, stagnant wage growth, and rising living costs. Here’s what the data shows, why it matters, and what it means for consumers and policymakers.

— ### **The Claim: Credit Card Spending is “Through the Roof”** On May 6, 2026, Kevin Hassett, Director of the National Economic Council (NEC), told Fox News that credit card spending was “through the roof,” framing it as a sign of robust consumer demand. Hassett, a former economic adviser to Trump during his first term, stated:

*”In fact, I had the head of one of the big five banks in my office yesterday going through the credit card data. And just as Secretary [Scott] Bessent said, credit card spending is through the roof. They’re spending more on gasoline, but they’re spending more on everything else, too.”*

Hassett’s remarks sparked immediate backlash from Democrats and financial analysts, who argued the surge in credit card debt reflects economic distress rather than prosperity. House Minority Leader Hakeem Jeffries (D-NY) called the administration’s response “shameful,” even as California Governor Gavin Newsom’s office accused the Trump administration of being “out of touch” with working-class Americans.

— ### **What the Data Actually Shows** While Hassett’s statement aligns with recent trends in consumer credit, the underlying context paints a more complex picture. Here’s what the latest data reveals: #### **1. Credit Card Debt is Rising—But Not Equally** According to the Federal Reserve’s G.19 Consumer Credit Report, revolving credit (primarily credit cards) increased by **$22.3 billion in March 2026**, bringing the total to **$1.14 trillion**—a **12.5% annual growth rate**, the fastest pace since 2001. However: – **Lower-income households** are driving the majority of the increase. A Latest York Fed study found that credit card balances for families earning under $50,000 rose **20% year-over-year**, compared to just **5% for households earning over $100,000**. – **Delinquency rates** are climbing. The Fed reports that **5.7% of credit card accounts** were **90+ days delinquent** in Q1 2026, up from **4.8% in 2024**, with subprime borrowers seeing the steepest increases. #### **2. Inflation and Stagnant Wages Are the Culprits** The surge in credit card spending coincides with: – **Persistent inflation**: The Consumer Price Index (CPI) rose **3.4% year-over-year in April 2026**, with **gasoline (+6.8%)** and **food (+4.1%)** leading the increases. – **Wage stagnation**: Real average hourly earnings (adjusted for inflation) have grown just **0.8% annually** since 2023, according to the Bureau of Labor Statistics. For workers earning under $30/hour, wages have **declined in real terms** over the past year. #### **3. Credit Cards Are the “Last Resort” for Many** A Urban Institute report found that **42% of credit card users** in 2026 carry balances month-to-month, up from **35% in 2022**. Key findings: – **38% of borrowers** use credit cards to cover **essential expenses** (groceries, utilities, rent). – **22% report** they **cannot afford a $1,000 emergency** without going deeper into debt. – **Subprime borrowers** (credit scores below 620) now account for **30% of new credit card originations**, up from **22% in 2024**. — ### **Why This Matters: The Economic and Personal Risks** #### **For Consumers** – **Debt spirals**: The average credit card interest rate is **21.1% APR** (as of May 2026), according to the CreditCards.com Credit Card Study. Carrying a **$5,000 balance** costs **$1,055 annually** in interest alone. – **Credit score damage**: Late payments or maxed-out cards can drop scores by **50–100 points**, making future loans (mortgages, auto) far more expensive. – **Bankruptcy risks**: Personal bankruptcies tied to credit card debt rose **18% in 2025**, per the U.S. Courts Bankruptcy Statistics. #### **For the Economy** – **Consumer confidence is weak**: The University of Michigan Consumer Sentiment Index fell to **68.3 in May 2026** (below the 2008 financial crisis low of 68.7). – **Business lending slows**: Banks are tightening credit standards for small businesses, with **45% of lenders** reporting stricter terms in Q1 2026, per the Federal Reserve’s Beige Book. – **Recession warnings**: Economists at Goldman Sachs and the IMF have flagged **rising household debt-to-income ratios** as a key risk for a 2027 downturn. — ### **Key Takeaways: What This Means for You** 1. **If you’re relying on credit cards for essentials**, reassess your budget. Prioritize cutting discretionary spending (dining out, subscriptions) to free up cash flow. 2. **Avoid maxing out cards**. Keep balances below **30% of your limit** to protect your credit score. 3. **Explore alternatives**: – **Balance transfer cards** (0% APR for 12–18 months) can save hundreds in interest. – **Personal loans** (fixed rates, often **10–15% APR**) may offer better terms than credit cards. – **Side income** (gig work, freelancing) can help reduce reliance on debt. 4. **Watch for policy shifts**: The Trump administration’s economic team has signaled **deregulation of financial services**, which could make credit more accessible—but also riskier. Monitor proposals closely. — ### **The Bigger Picture: Is This a “Strong” Economy?** Hassett’s framing—that rising credit card spending equals consumer confidence—ignores decades of economic research. Historically, **credit-fueled spending is a lagging indicator**, not a leading one. As Harvard economist Kenneth Rogoff noted in a 2025 Project Syndicate op-ed: > *”When households turn to high-interest debt to fund daily expenses, it’s not a sign of strength—it’s a sign of systemic financial stress. The real question isn’t whether people are spending, but whether they can afford to stop.”* #### **What Policymakers Should Do** – **Targeted wage support**: Raising the federal minimum wage (currently **$7.25/hour**) or expanding earned income tax credits (EITC) could reduce reliance on credit. – **Consumer education**: The CFPB has launched a national campaign to help borrowers avoid predatory lending practices. – **Monitor bank lending**: The Fed’s **Supervisory Guidance on Credit Card Practices** (2024) requires banks to assess borrowers’ ability to repay—but enforcement remains inconsistent. — ### **FAQ: Your Credit Card Debt Questions Answered**

— ### **The Bottom Line** Kevin Hassett’s boast about credit card spending reflects a **political narrative**, not an economic reality. The data shows that **Americans are borrowing more out of necessity, not confidence**. For consumers, the message is clear: **treat credit cards as a tool, not a lifeline**. For policymakers, the challenge is addressing the root causes—**stagnant wages, high costs, and weak financial safety nets**—before the debt spiral becomes unmanageable. As always, the best defense is a **strong offense**: **budgeting, saving, and diversifying income** to reduce reliance on high-interest debt. The economy may be “through the roof” for Wall Street—but for millions of households, the foundation is cracking. —

Sources: Federal Reserve G.19 Report (2026), New York Fed Consumer Credit Panel, Urban Institute Debt Study (2026), BLS CPI Data, Goldman Sachs Global Economics Paper (May 2026), CFPB Consumer Alerts.