Americans just wiped out $48B in credit card debt

HONOLULU (KHON2) — In early 2025, Americans made significant progress in reducing their credit card debt. According to a new report, during the first quarter of 2025, consumers in the United States paid off approximately $48 billion in credit card debt.

This brought the total national credit card debt down to about $1.29 trillion, which is $206 billion below the all-time high recorded in 2007.

The average credit card debt per household stood at $10,767 at the end of Q1 2025. This figure is $2,156 less than the record set in 2007, indicating that households are managing their credit card balances more effectively.

Several factors contributed to this decrease:

1. Higher interest rates: Credit card interest rates exceeded 20% annually, making borrowing more expensive. This likely encouraged consumers to pay down their balances to avoid high finance charges.
2. Increased consumer awareness: There has been a growing awareness about the importance of managing personal finances, leading more people to budget carefully and reduce unnecessary spending.
3. Economic factors: Changes in the economy, such as inflation and shifts in employment, may have prompted consumers to be more cautious with their credit card usage.

It’s important to note that while the overall debt decreased, the charge-off rate — which represents debts that credit card companies consider unlikely to be repaid — increased by 4.24% during Q1 2025 and reached 4.67%.

You can click here to read the full report.

The early part of 2025 saw Americans taking meaningful steps to reduce their credit card debt, and this was influenced by higher interest rates and a heightened focus on financial health.

However, the rise in charge-off rates suggests that some consumers still face challenges in managing their debt.