Americans Are Leaning on Credit Cards Like Never Before. For Some Homeowners, Refinancing May Offer Relief
A record share of Americans are carrying credit card debt, underscoring how deeply affordability pressures are straining household finances. A new analysis from The Century Foundation and Protect Borrowers found that about 111 million people — or half of all Americans with a credit card — are unable to pay off their balances in full each month. That financial pressure is colliding with rising everyday costs, including fuel, food, and medical expenses. For homeowners with sufficient equity, one possible way to reduce monthly debt pressure may be a cash-out refinance, which can replace high-interest revolving debt with a lower-rate mortgage balance. But that option carries meaningful risk and is far from a universal solution.
By Ira Margolis · 9 min read
Americans Are Carrying More Credit Card Debt Than Five Years Ago
A growing number of U.S. consumers are relying on credit cards not as a convenience, but as a financial lifeline.
According to a joint report from The Century Foundation and Protect Borrowers, roughly 111 million Americans currently carry credit card debt. That represents 50% of people with a credit card and about 40% of the U.S. adult population. The report says that figure has climbed 17% from five years ago, when about 95 million people were in the same position.
The increase points to a broader affordability problem that was already taking shape before another shock hit household budgets: rising fuel prices.
Julie Margetta-Morgan, president of The Century Foundation, told CBS News that many consumers were already in an “impossible financial situation” even before geopolitical tensions and higher oil prices put more pressure on monthly budgets.
Rising Costs Are Hitting Households Already Under Strain
The report’s findings suggest many households were already on unstable footing before the latest jump in gas prices.
According to the article, fuel costs had risen sharply in the period discussed, with gas prices nearing $4 a gallon and running about 34% higher than a month earlier. For households already stretched thin, that kind of increase can ripple through nearly every category of spending.
The pressure is not showing up only in card balances.
A separate study from The Century Foundation, cited in the article, found that:
One-quarter of Americans said they had skipped meals to cover monthly expenses
One-third said they had delayed or skipped medical care
Those findings paint a stark picture of consumers making increasingly painful tradeoffs just to stay current on bills.
High Interest Rates Make Credit Card Debt Harder to Escape
Credit card debt is especially difficult to manage because the cost of carrying it remains so high.
The article cites LendingTree data showing the average credit card interest rate at 23.7%. At that level, borrowers making minimum payments can spend years trying to pay down balances while much of each payment goes toward interest rather than principal.
That dynamic can trap households in a cycle where debt balances remain stubbornly high even as families continue making monthly payments.
Margetta-Morgan argued that consumers are not only carrying large balances, but doing so at exceptionally expensive rates. The report also estimated that Americans have paid $2.1 trillion in credit card interest since 2010.
A Political Debate Over Interest Rate Caps
The growing debt burden has also drawn attention in Washington.
According to the article, President Trump floated a proposal in January to cap credit card interest rates at 10%, framing the idea as a way to stop consumers from being overcharged by card issuers. But the proposed cap had not been enacted.
The report estimated that a 10% cap would save Americans $368 million in interest each day. At the same time, the banking industry pushed back, arguing that such a cap could reduce access to credit and push some consumers toward riskier borrowing products.
That debate highlights a central tension in consumer finance policy: how to protect borrowers from excessive costs without restricting credit availability for households already under pressure.
Why This Matters for the Mortgage Industry
This is not just a credit card story. It is also a housing finance story.
When households are burdened by revolving debt, the effects can spill directly into mortgage performance, qualification, and overall housing market health. High credit card balances can:
Raise debt-to-income ratios
Lower credit scores over time
Reduce a borrower’s ability to qualify for a home loan
Make it harder for existing homeowners to keep up with all monthly obligations
Increase financial vulnerability during periods of inflation or job instability
For mortgage lenders, brokers, and housing professionals, rising unsecured debt is an important signal. It can indicate that borrowers who appear current on paper may still be dealing with significant financial stress beneath the surface.
For homebuyers, large revolving balances can weaken purchasing power. For existing homeowners, they can make monthly budgeting increasingly difficult, especially when insurance, taxes, utilities, and other household costs are also rising.
How a Cash-Out Refinance Could Lower Monthly Debt Payments
For some homeowners, refinancing may offer a way to reduce monthly financial pressure by consolidating high-interest credit card debt into a mortgage with a lower interest rate.
In a cash-out refinance, a borrower replaces their current home loan with a new, larger mortgage and uses the difference in proceeds to pay off other debts, including credit cards. Because mortgage rates are typically far lower than credit card rates, this strategy can significantly reduce the required monthly payment on that debt.
Instead of managing several revolving accounts with rates near or above 20%, a homeowner may be left with one mortgage payment at a lower rate and over a longer repayment term. That can improve monthly cash flow and create breathing room for households that are only making minimum card payments and watching balances linger month after month.
For borrowers facing rising costs for gas, groceries, and healthcare, that lower monthly burden can make a meaningful difference.
The Tradeoffs Homeowners Need to Understand
Still, using a mortgage refinance to pay off credit cards is not a simple win.
Rolling unsecured debt into a home loan turns that debt into an obligation secured by the property itself. In practical terms, that means missed payments could put the borrower’s home at risk. Homeowners also need to weigh:
Consideration | Why It Matters |
|---|---|
Closing costs | Refinancing comes with upfront fees that may reduce the net benefit |
Repayment term | Stretching debt over many years can lower monthly payments but increase total interest paid over time |
Home equity | Borrowers need sufficient equity to make a cash-out refinance possible |
Rate environment | The economics depend heavily on the new mortgage rate compared with the borrower’s current rate |
Spending habits | Paying off cards only helps if borrowers avoid running balances back up again |
For the right borrower — someone with strong equity, reliable income, and a disciplined plan — a cash-out refinance can be a practical tool to regain control of monthly obligations. But it should be evaluated carefully, not treated as a blanket solution.
Who Is Most Likely to Benefit
A refinance-based debt consolidation strategy may be most useful for homeowners who:
Have built meaningful equity in their home
Are carrying high-interest credit card balances
Need to reduce monthly debt payments, not just total balances
Can qualify for a mortgage refinance on workable terms
Are committed to not rebuilding revolving debt after consolidation
For borrowers who do not meet those conditions, other solutions may be more appropriate, including structured budgeting, hardship assistance, balance transfer options, or speaking directly with a housing counselor or financial professional.
What Borrowers and Lenders Should Watch Next
If affordability pressures continue to build, the mortgage industry may see more borrowers exploring ways to improve cash flow rather than simply lower rates.
That could include:
Cash-out refinances for debt consolidation
Home equity products used to pay off revolving balances
Increased demand for mortgage guidance tied to household budgeting
Greater underwriting attention to consumer debt burdens
More concern about borrower resilience if living costs keep rising
The underlying issue is larger than credit cards alone. When millions of consumers are leaning on high-interest debt to cover basic needs, the consequences can eventually reach housing, mortgage performance, and financial stability more broadly.
Frequently Asked Questions
Why are more Americans carrying credit card debt?
The article points to broad affordability pressures, including rising costs for essentials such as fuel, food, and medical care. Many households appear to be relying on credit cards because income is not keeping up with expenses.
How many Americans currently carry credit card debt?
According to the joint report cited in the article, about 111 million Americans carry credit card debt. That equals 50% of Americans with a credit card and about 40% of the U.S. adult population.
Why is credit card debt so hard to pay off?
A major reason is interest. The article cites an average credit card rate of 23.7%, which can make it difficult for minimum payments to meaningfully reduce principal balances.
Can refinancing a home help pay off credit card debt?
Yes, in some cases. A cash-out refinance can allow a homeowner to use home equity to pay off higher-interest credit card balances and reduce monthly debt payments.
Is using a cash-out refinance to pay off debt risky?
Yes. Credit card debt is usually unsecured, but once it is rolled into a mortgage, it becomes tied to the home. Falling behind on payments could put the property at risk.
Who should consider debt consolidation through refinancing?
Typically, homeowners with strong equity, stable income, and a clear plan to avoid rebuilding credit card balances may be the best candidates.
The Bottom Line
The latest data shows that millions of Americans are not just dealing with debt, but struggling to keep pace with the cost of everyday life. Credit cards have become a bridge for many households, but they are also an expensive one — especially when interest rates remain so high.
For homeowners, that reality may open the door to mortgage-based strategies that lower monthly obligations. A cash-out refinance will not solve every problem, and it can create new risks if used carelessly. But in the right situation, it may offer a path toward more manageable payments at a time when many budgets are under severe strain.
That is why this issue matters well beyond consumer finance headlines. It sits at the intersection of debt, housing, affordability, and financial resilience — all of which are becoming more important to borrowers and mortgage professionals alike.
Sources
Source material provided by the user, including reporting attributed to CBS News, The Century Foundation, Protect Borrowers, and LendingTree.
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