"K-shaped economy" significant differentiation! U.S. residents' credit card debt rises to $1.28 trillion, hitting a historical high.

By the end of 2025, the scale of debt burden on American residents has once again set a new historical record. According to the latest household debt report released by the New York Fed on Tuesday, in the fourth quarter of 2025, U.S. credit card balances increased by $44 billion, rising to $1.28 trillion, reaching a new high, with a year-on-year growth rate of 5.5%. At the same time, the monthly Consumer Expectations Survey released by the New York Fed on Monday showed a decrease in the percentage of consumers who believe that their household financial situation will improve in the next year, while the percentage of respondents expecting the situation to worsen has increased, reflecting a weakening confidence in household finances. Researchers at the New York Fed pointed out that as the year-end approaches, credit card debt tends to rise due to the holiday spending season. Researchers stated at a press conference, "From the performance of the labor market, overall consumer spending remains resilient." However, even though the job market has shown some pressure, consumer spending can still maintain strength, mainly benefiting from continued consumption by high-income groups. Researchers emphasized that this phenomenon is a realistic portrayal of the "K-shaped economy." "The economic situation of some groups remains robust, but many others are facing significant difficulties." This differentiation is evident not only in default rates on auto loans, credit cards, and home equity lines of credit (HELOC), but also in the rising default rate on mortgage loans, indicating that more and more homeowners are starting to struggle to repay their mortgages on time. Research at the New York Fed also found that the rise in default rates is particularly pronounced in low-income areas, showing that economic pressure is increasingly concentrated on households with lower income levels. In the current interest rate environment, credit cards have become one of the most expensive forms of financing. Data shows that the average interest rate on U.S. credit cards is around 20%. Currently, about 175 million people in the U.S. hold credit cards, with some people paying their full balance every month. However, the New York Fed estimates that about 60% of credit card users will carry over their balance to the next month, enduring high interest costs continuously. President Trump has previously called for a temporary 10% cap on credit card interest rates. If this policy is implemented, it would significantly reduce the interest burden on revolving debtors. However, executives in the banking and financial sectors have clearly stated that they will oppose credit card price controls. Previously, they had successfully blocked measures by the Consumer Financial Protection Bureau (CFPB) to limit late fees on credit cards. Another report released on Monday by debt management company Achieve showed that 55% of consumers rely on credit card balances to pay for basic living expenses. Among those experiencing deteriorating financial conditions, many families are forced to make difficult decisions between paying off debt and meeting daily essential expenses. Andrew Housser, co-founder and co-CEO of Achieve, stated, "This is a real-world manifestation of the K-shaped economy. Half of the relatively affluent population is barely affected by short-term shocks in their financial lives; for others, financial 'stopping the bleeding' and trade-offs have become the norm." He warned, "The longer this situation continues, the wider the wealth gap will be stretched."