44% of Americans say credit card debt is biggest obstacle to wealth creation

Credit card addiction is preventing Americans from getting their financial affairs in order—a problem that affects even the most affluent Americans.

According to a recent survey by wealth adviser Edelman Financial Engines, 44% of Americans said credit card debt is their biggest obstacle to wealth creation.

This is higher than in 2023, when 39% cited credit card debt as their biggest wealth obstacle.

Of the 93% of survey respondents who have credit cards, half (49%) said they carried debt each month, and 21% said their balances exceeded $20,000.

“In our third year of conducting this research, we’re once again noticing that many Americans—even the affluent—aren’t feeling overly confident about the state of their finances,” said Amin Dabit, the head of wealth planning at Edelman Financial Engines.

In addition to credit card debt, Dabit highlighted inflation and family responsibilities as top reasons for Americans’ growing financial anxieties.

By the end of the second quarter, Americans collectively owed $1.14 trillion in credit card debt. This figure swells to $1.36 trillion when other forms of revolving credit are included.

The average interest rate on credit cards has reached a new all-time high of 23.4%. That translates to a staggering $318 billion in annual interest charges on revolving credit loans.

Delinquencies and balances on the rise

According to research by the Philadelphia Fed, more consumers are falling behind on their credit card payments than ever before.

“All measures of balance-based credit card delinquency rates posted their highest levels in the nearly 12-year history,” Atlanta Fed researchers noted in July, referring to the steep rise in payments that were past due.

Separate research from the New York Fed also showed an increasing probability of consumers missing their minimum credit card payment.

By August, the average probability of missed payments in the next three months was 13.6%, the highest since the pandemic lockdowns in April 2020.

Perhaps the most concerning part is that delinquencies are rising as Americans become more reliant on their credit cards for everyday expenses.

According to data from TransUnion, the average credit card balance grew by 4.8% to $6,329 in the second quarter. As Creditnews reported at the time, credit card debt is growing faster than the underlying inflation rate.

Industry sources further corroborate this trend, with Citigroup’s chief financial officer, Mark Mason, warning that customers were carrying larger balances.

Smaller lenders, like Bread Financial and Synchrony Financial, said they expect to write off more bad loans for the rest of the year.

Missed payments have become a “bigger issue for people in the bottom half of the income spectrum,” said TD Cowen analyst Moshe Orenbuch.

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