Fed's interest rate cut – Will it ease the credit card debt burden?

The Federal Reserve's decision to approve a quarter-point interest rate cut marks a significant moment in monetary policy, affecting both banks and consumers. While the rate reduction aims to balance economic conditions, many Americans may still feel pressure from their credit card debts, especially with borrowing costs remaining relatively high. YouGov’s Financial Services CategoryView and Profiles reveal how Americans are coping with these financial burdens.

Profiles data highlights that in the past year, 16% of US adults have seen their credit card balances increase, with middle-income individuals (19%) being more likely to report an increase compared to those with lower incomes (14%). Meanwhile, 12% have decreased their outstanding balances, with higher-income respondents showing a slightly higher likelihood of debt reduction (14%). Some 19% have managed to maintain their balance levels, and this percentage rises to 32% among higher-income Americans.

Current credit card debt also paints a concerning picture. While 46% of adults report having no credit card debt, a significant portion still faces financial strain. About 10% owe between $0.01 and $500, while 7% carry balances between $1,000 and $2,000. More concerning perhaps are the 6% who owe between $5,000 and $10,000, and the 2% owe over $20,000. These statistics illustrate the financial challenges many consumers continue to face - challenges that are compounded by debt interest.

YouGov’s CategoryView data further explores payment behavior, revealing that 19% of adults pay more than the minimum on their credit card balances each month but do not pay off the full balance. This habit keeps debt from ballooning but still exposes consumers to interest charges. On the other hand, 7% of respondents make only the minimum payment, leaving them more vulnerable to accumulating interest.

Methodology: YouGov Profiles is based on continuously collected data and rolling surveys, rather than from a single limited questionnaire. Profiles data for the US is nationally representative and weighted by age, gender, education, region, and race.

YouGov Financial Services CategoryView collects data on brands & consumers across the US every month. The data is based on the interviews of more than 9,000 American adults aged 18+ between March and November 2024.