Americans owe more on their credit cards, but serious payment problems have eased slightly. That improvement leaves a large gap between borrowers in poorer and richer areas, according to new data from the Federal Reserve Bank of New York, part of the US central banking system.
Its November 10 report puts card balances at $1.285 trillion at the end of September, up $22 billion in three months. The total includes money owed by people who pay their bills in full, as well as debt carried from one month to the next.
Where payment problems remain greatest
The researchers group borrowers by the average income in their ZIP code, the US postal area. The lowest-income group covers areas containing a quarter of the population, as does the highest-income group. An area's income does not tell us the income of every person living there.
They track balances that become at least 90 days overdue. Each quarter, they calculate what share of debt that was not already that late has fallen into this category. They add four quarterly rates to show the recent pattern over a year. The figures describe amounts of debt, rather than the percentage of people missing payments.
| Quarter ending | Lowest-income areas | Highest-income areas |
|---|---|---|
| September 2019 | 7.90% | 3.45% |
| September 2025 | 10.76% | 4.65% |
| September 2026 | 10.33% | 4.40% |
The latest rate in the lowest-income areas was about 2.35 times the rate in the highest-income areas. Subtracting one from the other gives a gap of 5.93 percentage points, compared with 4.45 points in 2019. Daylight Post found that the gap was therefore about a third wider than in 2019, although it narrowed over the past year.
The end of pandemic relief left an uneven recovery
The New York Fed researchers report that payment problems fell during the pandemic, when government support, temporary repayment relief and reduced spending helped households. The rates for different income areas moved closer together.
After 2022, late payments rose sharply, especially in lower-income areas. The researchers also found that lenders had issued a larger share of new cards to borrowers in those areas during the pandemic. Cards issued in 2020 to 2022 later made a large contribution to the rise in serious payment problems.
That history matters because access to borrowing and the ability to repay it are different things. More credit can cover a gap today while leaving a household with a bill to meet later. Lending decisions help shape who is exposed when support ends or living costs rise.
Household budgets face other pressures too. Our earlier reporting explains how rising energy prices can squeeze US households even as inflation slows. The credit data do not identify which particular bill caused someone to fall behind.
Paying on time can still leave a heavy bill
A separate November 12 report from Bank of America gives a more recent view of its own customers. It found a higher share paying their full card balance each month than in 2019 or 2025, across income groups. It also found a small increase this year in the share making only the minimum payment.
Those findings can coexist. The minimum is the amount a cardholder must pay that month to keep up with the required payment. Paying it on time can leave the rest of the debt outstanding. A household can therefore be meeting its obligations while struggling to clear what it owes.
Most cards offer an interest-free period on purchases if the balance is paid in full and the conditions are met. Carrying debt can remove that protection. Interest then adds to the cost of paying over time. Paying only the minimum generally means a longer repayment period and more interest.
The bank's customer sample is different from the New York Fed's national credit-report sample. Its figures show another sign of pressure before someone reaches the 90-day overdue stage.
Lenders also shape the cost
Borrowers' finances are only part of the picture. Research published by the New York Fed on November 4 examined how lenders changed rates offered on new cards when their own borrowing costs changed.
Using about 14 million new accounts and events from 2008 to 2019, they found that lenders passed on less of a fall in funding costs in markets where they held a larger share. Similar borrowers taking similar cards from the same lender could receive different rates.
This concerned offers on new accounts in those years, rather than the rates on today's existing cards. It shows why the cost of borrowing also depends on lenders' pricing decisions, even for people with similar incomes and credit histories.