US credit card companies are tightening their belts as economic clouds gather. Major lenders like JPMorgan Chase, Citigroup, and Synchrony are boosting reserves to cover potential losses, while others, such as US Bancorp, are shifting focus toward wealthier clients. This cautious approach comes after a rising in delinquencies and a broader economic slowdown fueled by renewed trade tensions.
As the economic scenario worsened worldwide and prices rose bringing inflation, Americans increased the pace in which they spend, borrow and open new credit cards. American Express, for instance, reported a 7% increase in US consumer spending in the first quarter of this year. It could be a good thing for the companies, if all of them were paying the bills.
But it’s not the case. The US credit card debt hit an all-time record high of $1.2 trillion by the end of last year, according to the Federal Reserve (Fed). At the same time, a record 10.75% of active cardholders were making only the minimum monthly payments, the highest level recorded since tracking began in 2012. The data highlights the growing financial strain facing many Americans, as more households live paycheck to paycheck and struggle to save money.
All-time high debt
The International Monetary Fund (IMF) has downgraded its US growth forecast for 2025 from 2.7% to 1.8%, citing President Trump’s renewed tariffs and trade tensions as significant challenges for development. The IMF warns that these policies could lead to higher inflation and further economic instability—a prediction already coming true.
American Express, which caters to a higher-income portfolio of customers, has seen steadier performance. The company reaffirmed its guidance for double-digit revenue growth this year, after noticing the increasing in client’s spending. But Amex is tracking behavior closely: travel and entertainment lost share in customer spendings for essencial categories (such as groceries and daily spendings) in the first quarter of this year.
Context and scenario
The surge in credit card usage is driven by a combination of higher costs and reductions in income, with more consumers turning to credit cards to maintain financial stability. In recent months, analysts have pointed to inflationary pressures, shrinking savings buffers, and a slowdown in wage growth as key factors behind this trend.
Rather than being used for discretionary spending, credit cards are increasingly becoming a tool for covering everyday necessities—a shift that signals deeper financial stress in US households. With rising delinquencies and a potential downturn on the horizon, lenders are bracing for a more challenging environment in the coming months.
