Credit card balances fell in the first quarter of 2026, according to the latest Quarterly Report on Household Debt and Credit from the Federal Reserve Bank of New York. The report shows credit card balances decreased by $25 billion to $1.25 trillion, a 2.3% decrease from the previous quarter.
However, that’s still a 5.9% increase from the previous year. The dip in balances is attributed to seasonality, as the New York Fed pointed out in a call with reporters on Tuesday. This type of dip is expected after the holidays, which saw an increase in balances. Those balances then fall again in the first quarter of the new year.
When it comes to delinquencies, the New York Fed found that while transitions into early delinquency held steady for auto loans, they ticked downward for credit cards, from 8.7% to 8.6% year over year, and for mortgages from 3.9% to 3.8%.
[Read: Best Balance Transfer Cards]
“Aggregate household debt levels rose slightly, with modest increases in most debt types offsetting a seasonal decline in credit card balances,” said Daniel Mangrum, research economist at the New York Fed. “Delinquency transition rates were mostly steady, while student loan delinquencies are returning to prepandemic levels.”
In a complementary study by Achieve, a digital personal finance company, 53% of American consumers say they carry credit card debt to cover the rising costs of essential expenses. And 35% say it’s “difficult” or “very difficult” to maintain on-time debt payments.
“Credit card spending can look strong on the surface, but the underlying question is what consumers are actually putting on those cards,” says Austin Kilgore, analyst for the Achieve Center for Consumer Insights. “Increasingly, we’re seeing Americans rely on revolving debt not for discretionary spending, but to manage the rising cost of everyday necessities.” Researchers at the New York Fed agree the economy is still K-shaped, with higher-earning consumers feeling fewer negative effects of financial strife than their lower-income counterparts.
“For many households, higher balances are less a sign of economic optimism and more a sign that wages and savings are struggling to keep pace with essential expenses like groceries, utilities and housing,” says Kilgore.
More from U.S. News
AmEx Gold Announces Special Perks to Celebrate 60 Years
Is the New Chase Disney Credit Card the Best for Your Summer Disney Plans?
How to Get Free Flights With Credit Card Rewards
Credit Card Balances Up Nearly 6% Year Over Year, Fed Report Says originally appeared on usnews.com
