MIAMI—Consumers added $28 billion in credit card debt during the second quarter of 2025, according to WalletHub’s new Credit Card Debt Study. However, a Fed rate cut of 50 BPs could save borrowers almost $4 billion over the next 12 months, the company said.
Addressing the debt increase, WalletHub Editor John Kiernan noted that although this increase wiped out roughly half the first-quarter paydown, it’s 31% below the average amount consumers have added during the second quarter of the year dating back to 2021.
“That’s the good news,” he said. “The bad news is consumer confidence in the economy is flagging, and concerns about inflation are sky high. Nearly three in five Americans think the economy is getting worse, according to a new WalletHub survey, and 77% of people are more worried about inflation stealing their money than AI stealing their job. A Fed rate cut in September could save households billions over the next 12 months, but people still aren’t very excited due to their expectations for high prices for the foreseeable future.”
WalletHub’s Fed Rate Survey forecasts that if the Federal Reserve cuts rates by 25 BPs next week, credit card users will save roughly $1.92 billion in interest over the next 12 months. Many analysts are predicting the Fed will reduce rates by 50 BPs.
Credit Card Debt Study Key Findings
- Q2 Results: At $28 billion, the increase in credit card debt during Q2 2025 was around 21% smaller than the increase in Q2 2024.
- Debt Is Well Below the Peak: Total credit card debt as of Q2 was roughly $1.32 trillion on an inflation-adjusted basis, which was about 13% below the record high.
- Household Debt Has Some Breathing Room: The average household credit card balance was around $10,951 at the end of Q2 2025, after adjusting for inflation. That’s $2,062 below the record high.
- Early Q3 Returns: Preliminary data for July shows a 0.4% increase in credit card debt compared to the same month last year.
Projected Impact Of A Fed Rate Cut
- Consumer Savings: Credit card users will save roughly $1.92 billion in interest over the next 12 months if the Fed cuts its target rate by 25 basis points on September 17 (88% probability).
- Mortgage Savings Boost: The Fed’s September 17 rate cut has already decreased the cost of the average 30-year mortgage by $9,763 over the life of the loan, as mortgages have fixed rates that are priced with a far longer time frame in mind than other borrowing methods.
- Auto Loan Rate Drop: WalletHub expects the average APR on a 48-month new car loan to drop by around 12 basis points in the months following a 25-basis-point Fed rate cut.
See the full results of WalletHub’s Fed Rate Survey.