ACROSS THE UNITED STATES — Americans' outstanding credit card balances reached a record high of $1.28 trillion, according to New York Federal Reserve data. The balances increased nearly 6% over the previous year.

The use of buy-now-pay-later services has also grown. According to a Federal Reserve report, 15% of Americans used buy-now-pay-later services in 2025, up from 10% in 2021. The same report found that 81% of Americans held a credit card in 2025.

A December 2025 Consumer Financial Protection Bureau report provided additional data on buy-now-pay-later usage. In 2023, 53.6 million consumers took out a buy-now-pay-later loan across six firms in the CFPB's sample. The number of consumers taking these loans increased by 12% from 2022 to 2023. The average loan amount rose to $848 in 2023 from $725 in 2022.

"It's not only the switch from cash to credit cards, it's also the ability to store your card information on the web and automatically fill it in when prompted," said Abigail Sussman, marketing professor at the University of Chicago Booth School of Business. Sussman added, "I don't think consumers are doing anything wrong. I think it's just that the systems that are in place are really designed to make spending frictionless."

"The part of our brain that wants what it wants when it wants it is so much stronger than the part of our brain that's a brake system that says, 'Wait, hold on, can we really afford this?'" said Kristina Durante, social psychologist at Rutgers Business School.

Some consumers have changed their spending habits in response to credit card debt. Mirav Steckel signed up for 15 credit cards at age 18, initially believing that credit card discounts and rewards would save her money. She later asked people around her for money to pay off her credit card balances. At age 21, Steckel began using cash instead of credit cards to follow her monthly budget. Using physical cash instead of digital payments has helped her curb her spending.

"Points don't feel like much. And so if you can convince me that I'm not paying with money, but with some monopoly money such as credit card points, that will obscure the price," said Ayelet Fishbach, behavioral science professor at the University of Chicago.