By Venessa Wong
Many Americans are piling on debt even as they try to save. Here’s how to break the cycle.
Only 32% of middle-income Americans are paying their credit-card balance in full each month, down from 38% two years ago, according to a new report from Primerica.
Marissa Zuckerman had always been “very good” with her money. The 31-year-old paid for her car in cash, and she had just one credit card that she saw as a “credit-building tool” and paid off in full each month.
But she wasn’t happy in her job, and a breakup with her boyfriend about two years ago pushed her “over the edge” emotionally, she said.
Zuckerman started charging food delivery to her credit card one to three times daily, spending about $10,000 in total. Despite making payments every month on the balance, she accrued revolving credit-card debt that has hovered around $6,000, at a 27% interest rate.
Food “has been a coping mechanism for so much of my life, and the credit card really just made it easy to not resolve my issue, but exacerbate it,” she told MarketWatch. She said meal delivery became an “addiction,” giving her “a sense of comfort and fullness.”
“It was very easy to get sucked into the convenience of it,” she said, “to just put it on a credit card and not actively think about the financial consequences of it.”
As inflation ratchets up the financial pressure on consumers and credit-card interest rates remain stubbornly high – averaging 24.35% in August – financial experts told MarketWatch there is an urgent need for people who have revolving balances not only to develop a plan to pay them off, but to reset their entire relationship with credit cards, which have become a ubiquitous form of payment that can allow people to easily amass debt, not just with large purchases, but with everyday transactions.
MarketWatch asked financial planners and financial therapists how people struggling with credit-card debt can reset their approach in order to get a handle on their spending.
Why it’s important to get credit-card debt under control now
“The average credit-card rate has consistently been above 20% since March 2023. Prior to that, it had never touched 20%,” Ted Rossman, a senior industry analyst at Bankrate, told MarketWatch. Even as analysts widely expect the Federal Reserve to cut its benchmark interest rate this month, that “won’t meaningfully lower [consumers’] credit-card bills,” he noted. The best approach, he said, is to pay off any card balance in full.
Since Bank of America first mailed 60,000 unsolicited credit cards to residents of Fresno, Calif., in 1958 – the symbolic start of the era of the modern bank card – credit cards have gradually replaced cash as the most popular form of payment in the U.S.
More than 80% of Americans have a credit card, and the average person has 3.7 active cards. Last year, credit cards accounted for 35% of consumer payments (in terms of the number of transactions, not the dollar amount), compared with 18% in 2016, according to the Federal Reserve. The increase is driven partly by how businesses operate now: Only 65% of small businesses reported accepting cash as a form of payment in a separate Fed survey in 2023.
It is harder for people to control their spending when they use credit cards than when they pay with cash, studies have found, and this shift has made credit-card debt “endemic” in America, Glenn Downing, a financial planner at CameronDowning, told MarketWatch.
“Nobody uses cash, and so the danger here is that, unless you’re really on top of your spending, you can run up a balance you can’t afford,” he said, adding: “Credit-card interest is usurious. I don’t know how it’s even legal to have an interest rate of 35% or 32%, but I’ve seen them.”
Middle-income Americans are the most likely to have credit-card debt, Federal Reserve data show. In a September report from Primerica, about 39% of middle-income Americans polled in June said they had increased their credit-card usage, an 11-point increase from early 2025 and the highest level since 2023. Only 32% paid their credit-card balance in full each month, down from 38% two years ago.
Even as Americans have shifted their focus to increasing their savings this year, the average credit-card debt per borrower rose to $6,473 in the second quarter, a 22.8% increase from the same period in 2022, according to credit bureau TransUnion (TRU).
From the archives (March 2024): Lowe’s customers slam retailer for ‘predatory’ 31.99% credit-card APR
Beware the ‘normalization’ of credit-card debt
People can use any number of strategies pay off their credit-card debts, Downing said: the snowball method (paying off the smallest debts first to build momentum), the avalanche method (paying off the highest-interest debts first, which saves more money), rolling over the balance to a new credit card with a 0% introductory offer, or using a home-equity line of credit with a lower interest rate.
However, without addressing the behavioral or emotional issues that may be driving a person’s spending, he said he has found that “a few months later, the balances start to creep up again.”
Related: Should you use your home equity to pay off credit-card debt? Read this before taking out a HELOC.
“Financial decisions are made 90% emotionally and 10% logically,” Ashley Agnew, a financial therapist and senior wealth adviser at Centerpoint Advisors, told MarketWatch.
At the same time, she said, “one thing that’s happened in our country is the normalization of debt. … The conversation used to be, ‘This is my gas bill, this is my electric bill, this is my rent.’ Now the conversation is, ‘This is my credit-card payment, this is my student-loan payment, this is my car payment.’ Debt has recategorized itself as a fixed expense, and when you put it that way in your mind, it seems unavoidable.”
‘Debt has recategorized itself as a fixed expense, and when you put it that way in your mind, it seems unavoidable.’ Ashley Agnew, a financial therapist and senior wealth adviser at Centerpoint Advisors
About half of people do not pay off their balance each month, according to consumer surveys.
For Zuckerman, seeing her credit score fall to 740 prompted her to take action. “I’ve always been proud of that 800 mark. It’s really important to me to be financially secure and have good credit,” she said. “I looked at it and thought, ‘What the hell am I doing?’ This is not worth it. I have no excuses to not take care of my finances.”
Having already depleted her emergency savings to make monthly payments, she earmarked a large portion of each paycheck and sold some investments to pay off $5,000. She now has about $800 remaining on the card, which she plans to clear this month. Zuckerman also told the delivery app to remove her data, deleted the app from her phone and cut up her physical credit card.
“A lot of my [debt] was rooted in emotional trauma response, and the only way you’re going to tackle credit-card spending is to look at that – because you’re spending for a reason,” Zuckerman said.
Here are some steps credit-card users can take to help break the cycle of racking up debt.
1. Think of credit cards as being only for emergencies
Credit cards may have normalized debt for everyday costs, but they are really a “financial tool that allows you to, in very short order, be able to absorb any shocks,” said Joshua Dunlop, a financial planner who serves on the board of directors for the Financial Therapy Association. “We live in a country where people don’t lose their job because their car is broken, and that’s because we have credit cards that are ubiquitous.”
Financial planners told MarketWatch that the only reason someone should run up a balance that they can’t afford to pay off at the end of the month is an emergency expense that they did not have the cash to handle. That was the case for 45% of people with credit-card debt in a June Bankrate survey.
Yet many people “see [their credit limit] as accessible monies, rather than something for emergency needs,” Agnew said.
Downing has found the same thing. “This is the thing I have to challenge people on: Why did you charge this? Was it because it was something [necessary] you didn’t have the money for?” he said. Often he finds that people realize they spent on things they don’t care much about, and “they never bothered to put together a spending plan” that accounted for such purchases.
In Bankrate’s survey, 11% of people said their credit-card debt resulted from retail purchases, and 9% said it was tied to entertainment and vacations.
The best defense against taking on credit-card debt for emergencies is having a robust emergency fund, which financial experts now say should cover at least six months’ worth of living expenses for most people. Yet 24% of people surveyed by Bankrate in May said they have no emergency savings, and one-third have more credit-card debt than emergency savings.
More on this: Americans are ‘revenge saving’ after years of splurging: ‘Savings are a great way to have some certainty’.
2. Slow down purchases made with credit cards
The convenience of credit cards is what can make them dangerous for people who should be spending more carefully. The best defense is to slow down, Agnew said.
For non-necessities, people should ask themselves this question before they hit buy, Agnew said: “What are three positive ways that this purchase is going to impact [my] life?”
It is also helpful to not store a credit card as a method of payment on any websites or apps. “If every time you have to make a purchase, you have to punch those numbers, it’s almost like having to hand cash over,” Agnew said. “It’s the closest thing we’ve got, anyway.”
3. Make credit-card spending feel real again
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