WASHINGTON — Americans are charging more to their credit cards, but a growing share are paying their bills in full, helping push overall credit utilization to a three-year low, according to one new analysis.
Credit card balances at large banks reached $948.7 billion during the first quarter of 2026, up 3.2% from a year earlier, according to Federal Reserve Bank of Philadelphia data cited by U.S. News. Purchase volume increased 6.4%, while utilization — the percentage of available credit being used — declined to 19.1%, analysis by U.S. News & World Report stated.
The seemingly conflicting trends reflect greater use of credit cards for routine purchases and rewards rather than long-term borrowing, the analysis found.
Lora Monfared, head of consumer card products at Bank of America, told U.S. News that consumers increasingly use rewards and cash-back cards for groceries, fuel, travel and dining before paying the balances in full. Bank of America reported combined credit and debit card spending rose 9% from a year earlier, while more households across all income levels paid their monthly card balances in full.
Additional Contributors
Rising credit limits also contributed to the lower utilization rate. Total limits increased by $85 billion during the first quarter, according to Federal Reserve Bank of New York data cited in the analysis. A higher limit reduces a cardholder’s utilization rate even if the balance does not change.
The share of credit card accounts paid in full reached the highest level recorded in the Philadelphia Fed’s data series during the first quarter. The percentage of accounts paying either the minimum or more than the minimum but less than the full balance declined for a seventh consecutive quarter. Revolving balances fell to their lowest level since mid-2023.
U.S. News said average interest rates of about 24% on general-purpose cards may be encouraging consumers who can afford it to pay their balances in full.
Stress Being Masked
The overall improvement, however, masks continued financial stress among borrowers who carry debt. An August survey from the Achieve Center for Consumer Insights found 56% of respondents expected to need more than six months to repay their unsecured short-term debts, including credit cards and personal loans.
Michael McAuliffe, president and founder of Family Credit Management, told U.S. News that balances often accumulate gradually as consumers charge car repairs, groceries or expenses incurred before payday. Once a borrower falls behind at a 24% interest rate, he said, catching up can be difficult.
U.S. News cautioned that low utilization does not necessarily mean consumers have reduced their debt. Borrowers may have thousands of dollars in outstanding balances but low utilization because they have high credit limits. Conversely, consumers may make substantial monthly purchases without incurring interest if they pay their statement balances in full.
