MW Record share of credit-card accounts descend into debt as stock market ricochets

Andrew Keshner

More people are making only minimum payments and falling behind on their credit-card bills

A record-breaking share of credit-card customers were paying only their minimum monthly bill at the end of last year, topping a new high set one quarter earlier.

The data, in a Federal Reserve Bank of Philadelphia report released Wednesday, is another sign of deepening financial strain for everyday Americans - even when the stock market suddenly started looking a lot better Wednesday afternoon than it had in recent days.

In the fourth quarter, 11.12% of credit-card accounts were making the minimum payment, up from 10.87% in the third quarter, according to the Philly Fed data. The share of seriously delinquent credit-card accounts also broke a record set one year earlier.

The Philly Fed's report on credit cards and mortgages from big banks stretches back 12 years.

The Philly Fed data came as the stock market skyrocketed on the news of a 90-day pause for the Trump administration's tariffs above 10% for all countries except China. In recent days, equity markets got pummeled on the worries of a global trade war and higher chances of a recession.

Those routs scared investors about their portfolios and wealth on paper. Then the Dow Jones Industrial Average DJIA , S&P 500 SPX and Nasdaq Composite COMP all notched their biggest one-day gains ever on Wednesday.

But the Philly Fed report is a reminder that, far from Wall Street, many people are sinking deeper into high-interest credit-card debt.

When credit-card holders pay less than their full balance each month, the remainder is subject to double-digit interest rates that often surpass 20% these days. Americans carried an average card balance of $6,580 in the fourth quarter, according to the credit bureau TransUnion $(TRU.UK)$.

Paying only the minimum on a credit-card bill means it takes longer to pay off a debt, while acquiring more interest along the way. That's tough, especially when interest rates are high.

Credit-card interest rates hinge closely on the Federal Reserve's benchmark interest rate. Last week, Fed Chair Jerome Powell said he saw no immediate need to reduce the short-term rate while tariff uncertainty played out. The chances of an emergency Fed cut faded fast on the news of a tariff pause.

The numbers on credit-card payments are the latest signal that "people are struggling," said Matt Schulz, chief consumer finance analyst at LendingTree (TREE).

"Making the minimum payment is a pretty surefire way to stay in credit-card debt for a long time," he told MarketWatch. Longstanding credit-card debt means less money for other goals, like building up emergency cash savings. "In a time of great economic uncertainty, that's the last thing anybody needs," he said.

The Philly Fed data fits with other numbers showing more pressure on consumer finances and more debt weighing on households. Americans had $1.12 trillion in credit-card debt as of 2024's fourth quarter, according to the Federal Reserve Bank of New York.

Credit-card and car-loan delinquency rates are at the highest levels since just after the Great Recession, according to New York Fed numbers.

The nonprofit debt counselor Money Management International has seen a steady increase in new clients in recent months. In March, the organization had a 9% monthly increase in the volume of financial counseling it offered clients. Average unsecured debts for its clients averaged just over $30,600.

Schulz isn't surprised by the strain for credit-card holders, but is a little taken back by how long it took to get to record-breaking shares of minimum payments. Part of the rise may be explained by the resumption of student-loan payments and credit reporting on missed student-loan payments, he said.

"For the average family, when you have to start making an entirely new payment again, it's creating some real issues."

Major banks will give another look at Americans' finances later this week, when JPMorgan Chase & Co. $(JPM)$, Wells Fargo & Co. $(WFC)$ and Morgan Stanley $(MS)$ release their first-quarter earnings.

-Andrew Keshner

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April 09, 2025 16:50 ET (20:50 GMT)

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