More Americans are reaching their 50s and 60s with credit card balances still in tow. Total household balances reached historic highs at the end of 2025.
Credit card debt in the U.S. alone accounts for $1.28 trillion. High interest rates can quickly turn a manageable balance into a long-term drain.
Younger generations often grab the headlines for financial struggles. However, an increasing number of people are carrying these balances right to the edge of retirement.
Why you might be carrying a balance
You might expect your peak earning years to be a time of aggressive saving. Yet reality often looks much different.
Generation X, born between 1965 and 1980, now in their late forties to early sixties, carries the highest average credit card balance of any age group. Average balances hover near $9,600, according to Experian data.
The reasons are rarely reckless spending. Nearly half of adults carrying debt use cards for basic living expenses like food and utilities, a recent AARP survey found.
Medical expenses are a major driver. Dental work, prescription drugs and vision care frequently end up on plastic.
Caregiving is another major factor. Helping adult children, grandchildren or aging parents often falls on this demographic and strains monthly budgets.
Warning signs of financial strain
It is easy to normalize carrying a balance from month to month. Minimum payments can make the debt feel manageable even when it is not. With interest rates around 20%, even small balances can grow quickly.
The New York Federal Reserve reported that credit card delinquency rates have steadily increased. As delinquencies rise nationwide, lenders may tighten credit and keep interest rates elevated.
You may be experiencing financial strain if you notice these concrete signs:
- Paying only the minimums
- Using cards for essential living expenses
- Making new charges to cover old payments
- Lacking an emergency cash buffer
The trap of draining retirement accounts
When monthly payments become overwhelming, your 401(k) or IRA might look like a quick escape hatch. Cashing out a portion feels like a logical fix.
However, this strategy often creates long-term damage to your retirement plan. Pulling money from traditional retirement accounts triggers immediate tax liabilities.
If you are under 59.5, you face a 10% early withdrawal penalty. If you are older, you avoid the penalty but still owe taxes.
Beyond the immediate tax hit, you lose compound interest. Every dollar removed today is a dollar that will not compound for the next 10 to 20 years.
Better ways to manage mounting debt
There are safer alternatives to raiding your retirement funds.
If your credit score is strong, look into a card with a 0% introductory annual percentage rate on balance transfers. This buys you a window to attack the principal balance. Just be cautious, as transfer fees may apply and you need excellent credit to qualify.
You can also ask your credit card issuer whether you qualify for a hardship or reduced-rate program.
If you own a home, a home equity line of credit can offer lower interest rates than other lines of credit. Remember, you are putting your home at risk, so it is not for everyone.
Collectively, Americans have $30 trillion in untapped home equity, yet most can’t access it without taking on debt. Hometap lets you unlock up to $600K of your wealth without monthly payments or personal liability.
lets you unlock up to $600K of your wealth without monthly payments or personal liability.You can also contact a credit counseling agency for a debt management plan. Always verify you are working with a legitimate, accredited nonprofit before sharing personal information.
Protecting your future
Take an honest inventory of your mandatory expenses. See where you can trim your budget to free up additional cash flow.
Attack the debt with the highest interest rate first. Maintain the required minimum payments on all of your other accounts.
Taking action now can relieve retirement anxiety. It helps protect your savings and gives you more options later, so you do not have to work longer than you want.
