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Jessica Mendoza
Melissa Megason lives in South Portland, Maine, where she's worked as a medical assistant for most of her career.
Melissa Megason
We lived paycheck to paycheck, as many middle class people do here in Maine, but we were able to manage it
Jessica Mendoza
for a long time. Melissa and her then husband felt like they had a pretty good handle on their finances.
Melissa Megason
We would use credit cards if we needed to for emergencies, especially with four dogs come time to go for their annual physicals and shots and all that stuff, that would be the type of stuff we would put on there. We never took vacations, actually, we shared a vehicle for the longest time.
Jessica Mendoza
But then Melissa's life took a turn and she found herself pulling out her credit cards more and more often. The debt started piling up at its peak. What was the number that you were looking at in terms of what you owed to credit card companies?
Melissa Megason
The peak would have been just a little over 20,000 for me.
Jessica Mendoza
Melissa makes about $65,000 a year, so her credit card debt was almost a third of her income. And how did you feel or what were you thinking when you saw that amount, when it really sort of dawned on you?
Melissa Megason
I was shocked because you don't realize it, but then you start thinking about it. A lot of it is late fees over limit fees, late fees over limit fees every month that you don't pay. And so those keep adding up. It's like quicksand. You just keep going lower and lower and lower.
Jessica Mendoza
Melissa found herself in a hole, one that more and more Americans are falling into.
Dan Frosch
$1.25 trillion in the first quarter of 2026. That's the total credit card balance that American credit card holders have. That was the highest first quarter balance that the New York Federal Reserve had ever recorded.
Jessica Mendoza
Our colleague Dan Frosch writes about the economy, and he says that record number means Americans have $70 billion more in credit card debt than they did at the same time last year. As the debt rises, more and more people are delinquent, which means making their payments late or, or not at all.
Dan Frosch
Typically, people who don't have significant financial means will let credit cards slide first. But we also saw through the data that folks who were middle class or even upper income were struggling with delinquencies more than they had in years past as well. And so we have this massive, sort of astronomical number in the first quarter that is unprecedented. So these delinquencies seem to be sort of telling us a very clear story.
Jessica Mendoza
And what story is that?
Dan Frosch
The story is that Americans are having a much harder time paying off their debt right now. And this is happening across all income levels.
Jessica Mendoza
Welcome to the Journal, our show about money, business and power. I'm Jessica mendoza. It's Friday, June 5th. Coming up on the show, why Americans are racking up more credit card debt than ever.
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Jessica Mendoza
The average American carries about $6,500 in credit card debt. And the number of people with significant debt is going up. As of last year, about 20% of cardholders had a balance of over $10,000. Dan, what do we know about what's driving this increase in credit card debt?
Dan Frosch
Generally, we know that the cost of living has risen, in some cases markedly, when it comes to sort of household goods, groceries, things that you need, right? On the flip side, people's wages have gone up as well.
Jessica Mendoza
But recently, inflation has been growing faster than wages. And while inflation continues to climb, wage
Dan Frosch
growth is slowing, leaving many Americans struggling to stay afloat.
Jessica Mendoza
When inflation goes up, everyday life becomes more expensive.
Dan Frosch
That creates a situation where folks are having to spend more of their income on things that they need, things like food or utility bills or their rent. And so they end up dipping into financial resources that they otherwise didn't have to use. Putting groceries on your credit card where previously maybe you were using your debit card or paying cash for them, right? That's sort of the baseline level of people's financial experience. But then you throw in something else like a car repair, right? Or a house repair or a, or something that needs to happen, but is gonna cost you more than your groceries or your run of the mill shopping trip.
Jessica Mendoza
Like a sudden expense that's necessary.
Dan Frosch
Now, you're in real trouble, right? Because you've already not paid off these sort of lower level balances, and now you're being faced with a much higher expense that's gonna drive your minimum balance way up.
Jessica Mendoza
For people who mainly use credit cards to earn points or get rewards, this isn't as much of a problem. But for those who are turning to their credit cards to pay for basic necessities, that debt snowball effect can be devastating. And it doesn't help that interest rates for credit cards are also rising.
Dan Frosch
They're not only spending more and have less money to pay off their debt, but the interest rates on these credit cards make it such that you're not simply paying back the money that you've borrowed on your credit card. You're right, you're having to pay interest. And if you keep letting that go, if you carry that pursuit balance, then that interest rate is going to drive your minimum payment up. And in some cases, it's going to drive it up to a point where you're not going to be able to make it.
Jessica Mendoza
A few years ago, credit card interest rates were lower, hovering around 14%. That's because during the pandemic, staying home meant there was less to spend money on. Instead, some people actually used what they had or what they received through stimulus checks to pay down their cards. As the amount of credit card debt Americans owed decreased, credit card companies started trying to get more people to sign up. And they did that by offering good deals on credit card interest rates.
Dan Frosch
What you saw during the pandemic is low interest rates. A lot of folks who maybe would not have qualified for credit cards receiving credit cards. And so then the pandemic ends and you have inflation, but you still have these credit cards.
Jessica Mendoza
And as consumer spending has increased again, credit card interest rates have spiked, too. Those rates are based mainly on two the interest rate set by the Federal Reserve, plus the interest rate that a credit card issuer decides to charge. The average interest rate for a credit card has climbed to a record high.
Dan Frosch
So without a doubt, no matter your credit score, the cards in your wallet can carry much higher interest rates than just a few years ago.
Jessica Mendoza
Today's average credit card rate has risen to 21%. Melissa, the woman from Maine, had several credit cards with her then husband, including one with a 29% interest rate. How many credit cards did you have at that point?
Melissa Megason
At that point, he did have two that were just in his name. So he did have those. But joint we had on top of the credit cards, I had 1, 2, 3, 4, 5. I think I had 6 or 7, maybe 8.
Jessica Mendoza
For the most part, she and her husband were managing to keep up with the payments. But then they started having relationship trouble.
Melissa Megason
And I had done stupid things like when we were trying to work on our marriage, I was trying to make myself look better for him and do all these things. So I would shop at Victoria's Secret all the time and just spend a lot of money there because that's what he wanted. Spent a lot of money getting my hair done, going from brown to blonde because he liked me better as a blonde.
Jessica Mendoza
Ultimately, the marriage ended.
Melissa Megason
I was stuck with the credit card bills and my mortgage and four dogs. And then once I filed for divorce, it spiraled from there. I never thought I'd be 55 or 50 something and getting divorced. I was ready to start getting ready for retirement, and my whole life just kind of fell out from under me. So it was a lot all at
Jessica Mendoza
once, alone for the first time in 30 years. Melissa started using the credit cards to help with smaller everyday purchases, like dog food.
Melissa Megason
I needed to start using the credit cards to pay for gas, and I'd be like, okay, I have 20 bucks on this one I can use.
Jessica Mendoza
Melissa leaned on her credit cards to manage the finances of her new life. And she also used them as a way to cope with all the stress. She bought a bunch of new clothes. She took up baking as a hobby and splurged on kitchen equipment.
Melissa Megason
I would say, you really can't afford this, but I really want it, so I buy it. And I wasn't thinking clearly. The emotion I had been through and everything kind of piling down. I just wouldn't think about it till the credit card bill came in. They just started maxing out, and I just stopped paying them because I couldn't afford them. And the mortgage and my car payment, those kinds of things.
Jessica Mendoza
Her credit card debt ballooned.
Melissa Megason
And when it's that big, you know you can't pay it, so you just ignore it. When you get into that survival mode, you're going to prioritize. Okay, I need a roof over my head. I need electricity for this roof. I need a car to get to work. I need to put gas in that car. And then the economy was getting worse and worse, and prices were going up. So the credit cards, unfortunately, were the last on my totem pole to get paid.
Jessica Mendoza
Before we go on, I want to say that the next part of our story discusses suicide soon. Calls from collection agencies started coming in. After a while, Melissa says, it felt like the phone was ringing every hour. One of the credit card companies was demanding a $1600 monthly payment.
Melissa Megason
I was like, that's more than my mortgage payment.
Jessica Mendoza
What was it like to be getting collections calls?
Melissa Megason
It just compounded my depression because it made you so anxious. It's not like you don't want to pay them off. I did want to pay them off. It's just there was no way to.
Jessica Mendoza
Melissa says it was a really dark time for her.
Melissa Megason
And I was in my house alone all the time, and I was trying to pack up 30 years of memories all by myself and trying to get my house ready to be sold so I could get the most out of it. I could. I didn't really want to leave my house because it's my community and I loved it. I would be fine, like during the day, and then I would get some sort of trigger, and then all of a sudden, it'd be like, I just want to go to sleep and make the noise go away. The sale of the house, the divorce, not feeling good about myself. You know, all day long, I was getting calls from creditors at work. So it was all that stuff just piling up at once.
Jessica Mendoza
Melissa says she was diagnosed with depression and was prescribed medication. She says one night In August of 2024, she tried to kill herself.
Melissa Megason
A friend who knew what I was going through had texted me and asked me how I was doing. And I said, I don't think I'm doing well. I'm scared. And she called rescue. So that was when I finally got the help I needed. I was hospitalized. I was like, I can't. I can't do this anymore. That was my wakeup call. Like, I just, I. I need to get these credit cards under control. I need to do something.
Jessica Mendoza
After the break, how Melissa took back that control. Americans aren't just struggling with record credit card debt. They're also asking for help at record rates. Our colleague Dan Frosch says many of them are turning to credit counseling agencies.
Dan Frosch
These non profits go to the banks and the credit card companies say, hey, we want to get you your money back. But realistically, you're never going to be able to get this amount of money back with this interest rate from this individual. Let's set a lower interest rate. Let's get them on a plan, and let's maybe get rid of their late fees or whatever agreement they. They work out, and let's try to get you, the credit card company paid back in five years. It may take some time, but it is effective. And so that's what happened in Melissa's case.
Jessica Mendoza
Melissa was looking at about $20,000 in credit card debt spread across her different cards. How did you start to deal with your finances?
Melissa Megason
When you realize you're in this situation, you feel like trash because you feel like you're not paying your bills and you just don't feel good about yourself. And so I googled credit counseling.
Jessica Mendoza
Melissa found one of these nonprofit organizations that helps people consolidate and manage credit card debt.
Melissa Megason
So when I got involved with the credit counseling, they made me feel like, okay, you're not the only one in the situation. It happens, but let's now deal with it.
Jessica Mendoza
The service basically negotiated with the credit card companies on Melissa's behalf and got her lower interest rates and new monthly payments.
Melissa Megason
So mine ended up being $586 a month, which I knew I could manage. So when they gave me my debt management plan and I saw, okay, this is what I owe, yes, it's a lot of money, but in five years, you will be debt free from this. You know, you kind of have your beginning and end, so you start to see your way out of it and you start to feel better.
Jessica Mendoza
And. And where are you now with your credit card debt?
Melissa Megason
I'm down to $11,000, I think, so it's a little over halfway paid off.
Jessica Mendoza
And how did it feel to know that there could be an ending to this and there was a way through it that seemed manageable to you.
Melissa Megason
It was just liberating, like knowing that the accounts were all going to be closed and that they were all being satisfied because they accepted this agreement with the credit counselors. So I was hoping it would stop the calls and the collection letters. It hasn't totally, but most of them it has.
Jessica Mendoza
I mean, do we know anything about what this level of historic credit card debt, you know, you're talking $1.25 trillion. What does that do to the health of the country's economy?
Dan Frosch
Yeah, that's. It's something I wonder about as well. Right. Consumer spending is still strong, but that's really being carried, as I understand it, by sort of folks with financial means. But clearly, clearly, if there is a growing number of people who are carrying higher delinquency rates on their credit cards and they're carrying larger balances, they are going to be more hesitant to use those credit cards or they're going to be completely unable to because those credit cards will have been shut off. So I think it remains to be seen what this confluence of problems around credit cards is going to have in terms of a greater impact on the economy. But when you have more people in debt and more people delinquent and more people carrying balances, they're not paying off. No, it's not good for the economy.
Jessica Mendoza
As for Melissa, she says things are looking up. For one thing, she got remarried in October. How did you meet your husband?
Melissa Megason
On Tinder, of all places.
Jessica Mendoza
Hey, if it works, it works.
Melissa Megason
I didn't know what to do with a dating game. It had been 30 years.
Jessica Mendoza
Well, that's great.
Melissa Megason
Thank you.
Jessica Mendoza
Melissa also says she's got a New outlook about how to manage spending.
Melissa Megason
It's basically if I don't have the cash to pay for it, I don't pay for it. For example, I had an illness this winter and I ended up being out of work for three months. And Mike and I had planned a vacation for June and we ended up canceling it knowing we couldn't afford it, which is fine. I mean, I'd rather not go and owe it. On his credit card. He has one we use for emergencies, but we hardly use it and it gets paid off every month.
Jessica Mendoza
How do you feel about credit cards these days?
Melissa Megason
I hate them. I just, I mean my credit score has gotten a lot better, but every day I get at least five or six credit card offers. You're pre approved, Just all you have to do is send this in or go online and, and I get calls consistently. You're pre approved for your personal loan. Call us back to finish. I'm like, I never even applied for a personal loan. And you tell them to stop calling you, but they just keep sending you offers for credit cards, sending you offers. So when you're in one of those down moments and you can't afford something, then you're like, maybe I should just get this credit card so I can, you know, finagle it, especially with this economy. So I can see where people would do it. But I won't do it.
Jessica Mendoza
If you or anyone you know is struggling, you can reach the suicide and crisis lifeline by dialing or texting 980. That's all for today. Friday, June 5th. The Journal is a co production of Spotify and the Wall Street Journal. Special thanks to Anna Maria Andreotis. And by the way, this Sunday we'll have a special episode about the billion dollar business of the World cup and the scandals that have dogged its rise. It's the first of a two part series. Be sure to check it out. The show's made by Evelyn Fajardo Alvarez, Laura Benshoff, Kathryn Brewer, Pia Guadcari, Max Green, Ryan Knudson, Sophie Kodner, Matt Kwong, Colin McNulty, Laura Morris, Enrique Perez de la Rosa, Sarah Platt, Allen Rodriguez Espinosa, Heather Rogers, Piers Singhi, Jeevika Verma, Kathryn Whalen, Tatiana Zemis and me, Jessica Mendel Mendoza. Our engineers are Griffin Tanner, Nathan Singapak and Peter Leonard. Additional mixing this week by Sam Baer. Our theme music is by so Wiley. Additional music this week from Katherine Anderson, Peter Leonard, Bobby Lord, Emma Munger, Marcus Bagala, Griffin Tanner, so Wiley and Blue Dot Sessions. Fact checking this week by Mary Mathis and Kate Gallagher. Thanks for listening. Happy Friday.
The Journal. — June 5, 2026
Hosts: Jessica Mendoza & Ryan Knutson
Guests: Dan Frosch (WSJ reporter), Melissa Megason (Maine resident)
This episode explores why Americans have reached a historic high in credit card debt—$1.25 trillion in the first quarter of 2026—and the personal toll this surge is taking. Through the story of Melissa Megason, listeners hear how rising costs, changing economic conditions, and unexpected life events can push ordinary people into overwhelming debt. The episode also examines the broader economic implications of this trend and looks at potential solutions for those struggling.
On mounting fees:
On rising delinquencies:
Credit card rates today:
Emotional impact of collections:
Turning to credit counseling:
The episode ends with practical insight (credit counseling works), caution (risky lending is still omnipresent), and hope (personal recovery is possible). If you or someone you know is struggling, the show provides the Suicide and Crisis Lifeline: dial or text 980.
Tone: Real, empathetic, and direct, with a mix of hard economic facts and personal testimony.
For Listeners: The episode deftly blends macroeconomic trends with very human consequences—reminding us that under every statistic lies a personal story, and solutions do exist, even in the darkest moments.