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Main Street Ledger: The Affordability Story Behind Credit Card Balances

Increased credit card debt and delinquencies represent an affordability issue—not a product design one. As prices for essentials like food, housing, healthcare, and transportation continue to stress household budgets, consumers are increasingly relying on credit cards to fill the gap.

What Happened: In a new blog post, we analyzed recent coverage of credit card balances and delinquencies which understandably raise concerns about the financial health of American households and the role that credit cards play in their lives and explain headline numbers do not tell the full story.

Credit cards are where household financial stress often becomes visible. The drivers of that stress are the rising cost of essentials, what consumers actually pay to use credit cards, and how balances look after adjusting for inflation and a growing cardholder base.

  • Recent Federal Reserve data shows a larger share of credit card balances are seriously delinquent, with roughly 13 percent receiving no payments for 90 days or more compared to a 10-year average of nine percent.
  • The headline figure measures dollars in delinquency. It does not measure how many consumers are newly falling behind. The same data shows new movement into delinquency has been relatively flat, while separate Philadelphia Fed data shows the share of credit card accounts at large banks missing payments has held just under one percent for the last two years.

Why It Matters: To understand why balances are higher more generally, it helps to look at three pieces of context:

  • The rising cost of everyday essentials;
  • What consumers actually pay to use credit cards; and
  • How average balances look after adjusting for inflation and the growing number of cardholders

Between the Lines: A person’s bank account balance or credit card balance may be where signs of stress become visible, but the underlying pressure comes from the strain household budgets are feeling as the cost for everyday essentials increases. A recent CBA-supported analysis of data from the U.S. Bureau of Labor Statistics identified four major categories that have been putting increased pressure on household budgets:

  • Food
  • Housing
  • Healthcare
  • Vehicles/Transportation

In all, these “Four Horsemen” alone accounted for two-thirds of all consumer household expenses in 2024 and increased by over 20 percent from 2013 to 2024 in real terms. The same analysis also found that incomes largely failed to keep pace with the rising cost of necessities over this period.

The Bottom Line: The cost of essentials has changed, but credit cards haven’t. They are doing what they were built to do: standing between a hard month and a genuine crisis while families work to get back on stable footing. 

  • Keeping that in view — separating the pressures on household budgets from the tools that help absorb them — is what gets us to durable solutions on affordability.

Dive Deeper: To read the full blog post, click HERE. To read CBA’s comparison between APR and TCC click HERE. To read CBA-supported research on affordability, click HERE. To read CBA’s analysis of inflation-adjusted balances, click HERE.

What Else We're Watching

Illinois Delays Credit Card Fee Ban as Banks Score Win; Colorado Governor Vetoes Similar Legislation

What Happened: The Illinois General Assembly passed its budget last weekend and in doing so pushed the implementation date of the Illinois Interchange Fee Prohibition Act (IFPA) to July 1, 2027, which is a year delay from the original effective date. 

Why It Matters: The legislation aims to prevent financial companies from charging interchange fees on the tax and tip portions of a bill paid with a credit or debit card. Banking and credit union groups – the American Bankers Association, Illinois Bankers Association, America’s Credit Unions, and the Illinois Credit Union League – have been vocal in their opposition to the IFPA because of the trouble it could bring to participants in the payments ecosystem.

What They’re Saying: As the plaintiffs said about the IFPA being delayed:

“This reasonable step will protect Illinois businesses and consumers from facing payment chaos in just a month, without interrupting our ongoing legal challenge to IFPA […] We remain confident in the strength of our case and look forward to securing permanent relief from this misguided law.”

Yes, and: Last week, Colorado Gov. Jared Polis (D-Colo.) vetoed similar legislation the Colorado House of Representatives passed last month, which would have banned banks from charging interchange fees on the sales-tax component of transactions. 

Looking Back: In April, the Office of the Comptroller of the Currency said the IFPA “would create a complex, potentially unworkable, and destabilizing standard for national banks, Federal savings associations, and the nation’s payment card systems. Further, such effects could be exacerbated to the extent other states impose similarly unworkable or conflicting standards.”

Dive Deeper: To read more, click HERE.

New York Fed Highlights Consumer Harm of Credit Card Rate Caps

What Happened: The New York Fed released two blogs highlighting findings from a December 2025 staff report on the effects of interest rate caps on credit access in several states that recently adopted a 36 percent rate cap. 

Why It Matters: The Fed’s study finds that following a rate cap, there is only a marginal decline in lending in the aggregate with lending shifting from the highest risk borrowers to somewhat safer borrowers. This implies that the welfare effects of usury limits are complex as the riskiest borrowers lose credit access, while others benefit from increased credit.

By the Numbers: To better capture the variation in the impacts of rate caps, the study divided households into ten equal-sized groups by credit score. For borrowers in the lowest decile, “debt balances […] fall by around $2,000, relative to the balances of the riskiest borrowers in control states” without a corresponding change in delinquencies. Their results are consistent with the idea that lenders reallocate credit to relatively more creditworthy borrowers under rate cap limits:

“While borrowing declines substantially for borrowers in the lowest risk score decile, only a marginal decline is observed in the aggregate. This indicates that the increase in lending to borrowers in the third through fifth risk score deciles mostly offsets the decline in lending to borrowers in the second risk score decile.”

The Bottom Line: The impacts of usury limits vary across borrowers. High-risk borrowers can lose access to credit, while marginally more creditworthy borrowers can benefit from increased credit.

Dive Deeper: To read the full blog posts, click HERE and HERE. To read the full staff report, click HERE.

CFPB Issues Statement on ATR Requirements and Immigration Status

What Happened: The CFPB on Friday issued a statement regarding creditors' obligations under the Truth in Lending Act (TILA) and Regulation Z when assess a consumer's ability to repay a mortgage or certain open-end credit products, including credit cards.

  • The statement was issued consistent with Executive Order 14406, Restoring Integrity to America's Financial System, and states that a consumer’s immigration status is relevant to a creditor's ability-to-repay (ATR) analysis in certain circumstances. 
  • Specifically, the statement states that “considering whether information regarding an applicant’s immigration status indicates a reasonably expected change in future income is a matter of sound compliance practice.” 
  • The statement also emphasizes that existing regulations require credit card issuers to “establish and maintain reasonable written policies and procedures to consider the consumer’s ability to make the required minimum payments under the terms of the account.” 

Why It Matters: Under TILA and Regulation Z, before lending to consumers for dwelling-secured transactions or open-ended products like credit cards, creditors are required to consider the consumer’s ability to repay the loan. 

  • Noting that Regulation B, which implements the Equal Credit Opportunity Act, expressly states that creditors “may take the applicant’s immigration status into account,” the CFPB states under TILA, creditors may be required to consider immigration-related information when it bears potential impact on a consumer's future income and ability to repay. 

Looking Ahead: The statement will become effective upon publication in the Federal Register. 

The Week Ahead

📅 June 10, 2026, at 10 a.m.
U.S. House Financial Services Committee: Hearing on Examining Local Needs in Disaster Recovery
Washington, D.C., and Virtual

📅 June 11, 2026, at 10 a.m.
U.S. Senate Banking Committee: Hearing on AI and the American Dream: Promoting Innovation, Affordability, and American Dominance
Washington, D.C., and Virtual

📅 June 12, 2026, at 12 p.m.
U.S. House Financial Services Committee: Hearing on "Examining the Structure of the Federal Reserve System
Oklahoma City, Okla., and Virtual

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