Consumers are using their credit cards more as debt rises

But payment delinquencies remained stable in June

By Mark Huffman of ConsumerAffairs

July 31, 2025

• Total U.S. consumer debt rose to $17.86 trillion in June 2025, a 2% year-over-year increase.

• Subprime borrowers share of credit card debt surged past pre-pandemic levels, raising concerns.

• Student loan delinquencies spiked sharply following the end of a years-long reporting pause.

Consumers are going deeper into debt but appear to be managing it well. A new report from Equifax, one of the three U.S. credit agencies, shows total U.S. consumer debt hit $17.86 trillion in June, continuing a steady upward climb from $17.73 trillion in April and $17.80 trillion in May.

The overall delinquency rate on consumer debt remained flat at 1.5% in June, unchanged from the prior two months but up 0.2 percentage points since the end of the first quarter. This relative stability in delinquency levels suggests that many consumers are managing their financial obligations, at least for now.

At the surface level, our second quarter data showed that consumers are continuing to spend and avoid delinquency, said Tom ONeill, Market Pulse advisor at Equifax. However, he also emphasized a growing disparity: Theres a growing K-shaped split in the consumer landscape, with subprime borrowers falling behind.

Subprime borrowers backslide

The most concerning trend emerging from Equifaxs data is the mounting pressure on subprime borrowers, who usually pay the highest interest rates. During the pandemic, this group benefited from stimulus payments, spending declines, and a student loan payment pause, which helped reduce their share of bankcard debt to 14.7% by May 2021.

That trend has now reversed. By May 2025, subprime borrowers held 22.1% of all bankcard debt, a 3.5 percentage point increase over the past year and a 50.9% jump from their May 2021 low.

Though that still represents only a 7.8% increase from their pre-pandemic 20.5% share in January 2020, the total dollar amount is stark: Subprime bankcard debt has ballooned 135% since 2021, reaching $233.1 billion compared to $99.4 billion then. This far outpaces the 54% overall growth in total bankcard debt over the same period.

But the overall situation is stable

Despite the subprime strain, broader credit card trends show encouraging signs. Total bankcard balances rose to $1.07 trillion in June, a 4.2% increase year-over-year. The number of bankcard accounts also grew 5.7% to 581.6 million.

Bankcard delinquency rates dropped 4.4% year-over-year to 2.79%, and write-offs declined slightly to 57.4 basis points, signaling a level of stability following a peak in delinquencies of 3.22% in November 2024.

However, the student loan sector was marked by problems following the end of a five-year reporting suspension. As of June, student loan debt stood at $1.33 trillion down 11% from a year earlier with the number of active accounts dropping 15.6% to 146.7 million.

As payments resumed, delinquency spiked sharply. Severe delinquency rates (loans 90+ days past due or in bankruptcy) soared from 6.48% in March to 18.73% in May, before settling slightly to 17.95% in June. This sharp rise is directly tied to policy changes that resumed delinquency reporting in 2025.

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