Americans Carry $1.21 Trillion in Credit Card Debt, with 73% Tied to Essentials and Median Interest Rates at 25.3%

Gen X consistently holds the highest balances, as every generation – from Gen Z to Baby Boomers – incurs increases over the past three years

New research explores how cash-out refinances can provide qualified homeowners a lower-interest-rate option to tackle debt and improve financial stability

KANSAS CITY, Mo., Jan. 12, 2026 /PRNewswire/ -- Americans now carry a record $1.21 trillion in credit card debt – with 73% tied to essential living costs – as median interest rates reach 25.3%. In new research released today, Academy Bank reveals how persistent financial pressures are pushing households to rely more heavily on credit cards for everyday expenses, with the average user carrying a $5,595 balance. The bank's latest white paper, "Managing High-Interest Debt: How Cash-Out Refinances Can Help Homeowners Find Relief," analyzes national debt trends and examines how cash-out refinances may offer qualified homeowners lower rate loans to reduce high-interest balances.

Academy Bank compiled data from the Federal Reserve, Experian, Bankrate, NerdWallet, Freddie Mac and other trusted industry sources. The bank's new research examines consumer credit card usage, the drivers of high-interest debt, and the obstacles many households face in paying down balances. It also explores how cash-out refinances, when used responsibly, may help qualified homeowners consolidate high-interest debt at lower rates.

Rising Credit Card Usage Amid Financial Strain
According to the white paper, credit card usage remains nearly universal, with 81% of American adults holding at least one card in 2024. The typical adult owns 7.1 credit cards and actively uses 3.7, underscoring how credit plays a central role in household financial management.

Credit card debt remains elevated nationwide, with more than one-third (35%) of users with revolving debt expecting to carry balances indefinitely. Barriers to repayment – including record balances, limited savings, essential expenses, and mounting interest charges – mean that 14% of cardholders cannot consistently make even their minimum payments.

Generational Trends in Credit Card Debt
Every generation – from Gen Z to Baby Boomers – saw increases in average credit card debt over the past three years. Gen X holds the highest average balance of $9,600, but the data underscores that high-interest debt is a widespread challenge across all ages.

Debt Drivers: Necessities, Not Luxuries
Nearly three-quarters (73%) of credit card balances stem from emergency or day-to-day expenses such as car repairs, medical bills, home repairs and routine living costs – not discretionary spending.

Exploring Cash-Out Refinances as a Debt Relief Strategy
With high credit card interest rates, even modest balances can quickly grow, and nearly half (46%) of U.S. adults carry a balance.

For homeowners evaluating options to manage high-interest debt, a cash-out refinance – refinancing a mortgage for more than the amount owed and receiving the difference in cash – can provide a faster path to debt repayment for those who qualify. By leveraging the equity in their homes, borrowers can access funds at a lower interest rate to reduce their overall debt burden.

As home equity has grown in recent years, cash-out refinances have become increasingly feasible, most recently peaking in the second quarter of 2025. In October 2025, the Federal Reserve lowered interest rates further, creating a favorable environment for homeowners to initiate the cash-out refinance process. The average 30-year fixed mortgage rate then was 6.2% – roughly 20% lower than the double-digit APRs many Americans carry. According to Freddie Mac, recent cash‑out refinance borrowers withdrew approximately $94,000 in equity, more than enough to pay down the average American's credit card balance of $5,595.

The Academy Bank white paper emphasizes that cash-out refinances are not a one-size-fits-all solution. They require careful consideration of long-term financial implications, current mortgage rates and individual household goals. But for qualified homeowners, this approach can lower borrowing costs and support greater long-term financial stability.

"With credit card debt at record levels, understanding the realities of high-interest debt has never been more important," said Nick Alphs, President of Residential Lending at Academy Bank. "This white paper sheds light on the pressures facing American households and highlights tools – like responsibly using cash-out refinances – that save borrowers substantial money and help them more quickly reduce high-interest balances."

About Academy Bank
At Academy Bank, we realize that financial wellness is a gateway to life's meaningful moments. We provide simple, accessible banking solutions designed to support individuals and businesses wherever they are on their financial journeys.

Academy Bank is a full-service commercial bank with $3.14 billion in assets and 80 banking centers in Arizona, Colorado, Kansas, Arkansas and Missouri. Academy Bank provides a wide range of financial solutions for business and individuals, including commercial and business banking, treasury management and mortgage services. Academy Bank is privately held and family-owned by Dickinson Financial Corporation, a $4.58 billion holding company headquartered in downtown Kansas City, Missouri. Academy Bank's sister bank – Armed Forces Bank, headquartered in Leavenworth, Kansas – proudly serves active and retired military and civilian clients around the world with more on-base locations than any military bank in the country. For more information, visit www.academybank.com.

SOURCE Academy Bank