Although Americans are racking up more credit card debt, there are signs households are managing their debt better than they had been before.

Collectively, Americans now owe a record $1.21 trillion on their credit cards, according to a new quarterly report on household debt from the Federal Reserve Bank of New York. Credit card balances jumped by $45 billion in the fourth quarter of 2024, driven in part by holiday spending, and are now 7.3% higher than a year ago.

Bankrate Chief Financial Analyst Greg McBride says “more and more households [are] relying on credit to bridge that gap where the income stops but the expenses keep going.”

A new report finds that people are spending more on their cards and paying down less. Financial experts offer tips for reducing that debt, starting with looking at your spending habits.

Following the trend of the last several months, Americans’ household debt has increased once again to new record highs, according to the Federal Reserve Bank of New York.