Consumers added roughly $28 billion to credit card balances in the second quarter of 2025, pushing total outstanding card debt to about $1.32 trillion, according to data released yesterday by the Federal Reserve Bank of New York and Wallethub. That sits 2% below the all-time nominal record and 13% below the record after inflation. Early July readings show balances 0.4% higher year over year after inflation and at a new nominal July high without inflation adjustment.
Why it matters: For collectors, the mix of higher balances, rising finance charges, and softening job market expectations creates both more accounts and more payment friction. Yet risk is not flashing red: charge-offs moved lower and household leverage relative to deposits and assets remains far from past peaks.
By the numbers:
- Balances: $1.32 trillion at the end of the second quarter; which is $28 billion higher on a quarter over quarter basis.
- Average per household: $10,951 after inflation, $2,062 below the 2007 peak; down 0.1% year over year.
- Finance charges: $170.9 billion in Q2, up 2.61% from Q1.
- Charge-off rate: 4.31% in Q2, down 7.71% from 4.67% in Q1.
- Leverage ratios: Debt to deposits 7.3%, about 60% below the 2000 peak. Debt to assets 0.68%, about 51% below the 2002 peak.
Consumer sentiment check: The New York Fed’s August Survey of Consumer Expectations points to more caution:
- One-year inflation expectations: 3.2%.
- Job finding probability if displaced: 44.9%. This is a series low.
- Unemployment one year ahead: expected higher by 39.1% on average.
- Missed minimum payment risk: 13.1%, up 0.8 percentage point month over month, though still below the 12-month average.
- Perceived credit access vs. a year ago improved, but expectations for future access slipped.
Between the lines: Q2’s net build in balances was 21% lower than Q2 2024 after inflation, hinting that household borrowing growth is slowing even as rates keep finance charges elevated. The drop in charge-offs suggests lenders tightened early and are now seeing stabilization, but the series-low job finding probability is a leading risk for delinquency pressure into fall.
What to watch next:
- Seasonality: Back-to-school and holiday spend will lift balances in the second half of the year. This means keeping an eye on whether charge-offs hold near 4.3% or re-accelerate.
- Payment behavior: Watch roll rates on revolvers as finance charges rise.
- Credit access: Any renewed tightening could push more accounts toward hardship or payment plans.
Bottom line:
