Top Causes of U.S. Credit Card Debt Explained

Credit cards have evolved from a practical budgeting tool to one of the largest sources of consumer debt. American families and military households are experiencing this reality every day.

Armed Forces Bank reviewed industry research and consumer credit data to understand debt struggles and relief options. In our first article, we examined the statistics showing credit card use in the United States and why military families face greater debt challenges.

Today, we are asking the harder questions: What is causing credit card debt in America? And why can’t people pay off their debts? Keep reading to understand the real forces behind U.S. credit card debt.

A Quick Look Back: Military Families and Credit Card Debt

Before we move forward, here’s what the data showed us in our first article:

Most Americans own credit cards, and about 81% of adults have at least one. The average person carries 7 cards and uses 4 regularly. But ownership does not equal control. Nearly half of cardholders owe balances they can’t pay off month to month.^1,2,3

Military families face even tougher challenges. Between frequent moves, deployment disruptions, and job gaps, service members navigate constant financial strain. The numbers prove it:

• 41% of military households owe over $5,000 in credit card debt (compared to 28% of civilian households.
• 27% owe over $10,000 (compared to 16% of civilians)
• 10% owe over $20,000 (compared to 7% of civilians)⁴

These statistics reveal a clear pattern: Military families carry significantly higher debt burdens across all levels. Therefore, to find effective solutions, it’s important to learn why debt accumulates in the first place and what keeps families from eliminating debt.

For a full breakdown, revisit the first article in this series, “Average Credit Card Debt USA & Debt Relief for Military Families.”

What Causes Credit Card Debt in USA? Top Reasons Americans Go into Debt

A common misconception about credit card debt is that it stems from irresponsible spending—luxury purchases, excessive dining out, or impulsive shopping. However, the data reveals a fundamentally different picture.

Bankrate’s 2025 Credit Card Debt Report³ asked survey respondents why they carry card balances. The results? Nearly 73% of credit card is tied to basic needs and emergencies, NOT from splurging on things they don’t need.

Causes of credit card debt in USA:

• Day-to-day living expenses: 28% of debt comes from groceries, gas, utilities, etc. These are just the basic costs of keeping your household running.
• Unexpected expenses: 16% of debt comes from surprise costs that families couldn’t anticipate or avoid.
• Car repairs: 11% of debt comes from fixing vehicles, which is essential for commuting to work.
• Medical bills: 10% of debt comes from healthcare costs not covered by insurance.
• Home repairs: 8% of debt comes from necessary home maintenance. This includes replacing broken furnaces, fixing leaky roofs, or repairing failed water heaters.

The evidence is clear: Most Americans use credit cards to cover essential expenses and emergencies, not to live beyond their means. So, when groceries cost more, the car breaks down, or when medical bills arrive—THAT’S when people turn to credit cards. The question isn’t whether to use them, but whether there’s another choice.

For military families, these pressures hit harder. A PCS move means paying for temporary housing, cross-country travel, and security deposits on a new home or rental—all before your next paycheck arrives. Plus, deployments mean childcare costs skyrocket, or a spouse must quit their job entirely. Under those conditions, routine expenses are far more likely to escalate into financial emergencies.

Why is Card Debt So Hard to Pay Off?

Knowing what causes credit card debt is one thing, but resolving it is a far greater challenge. NerdWallet’s American Household Credit Card Debt study⁵ revealed some grim statistics:

• 35% of people with credit card debt say they expect to carry a balance forever: Not for a few months or until next year—permanently. These individuals are abandoning the prospect of becoming debt-free.
• 14% cannot afford even the minimum card payment: For these households, the problem isn’t poor money management. They simply don’t have enough income to cover monthly bills.

While 57% say they are actively trying to pay down their debt today, many others have adopted a passive approach. They are hoping for future circumstances to solve their problem rather than taking action now.

• Waiting for higher income: The most common strategy is to tackle debt once they earn more money. Interestingly, this applies EQUALLY to high earners and lower-income households, indicating that expenses outpace income at every level.
• Hoping for life changes: Many families are anticipating a financial break, like when childcare costs decrease, after they finish relocating, or when the kids finish college. Unfortunately, one expensive period usually ends just as another one begins.
• Counting on windfalls: People are depending on tax refunds, bonuses, inheritances, and other windfalls to help them get a fresh start. However, relying on unpredictable events means their debt continues growing in the meantime.

What is the pattern here? Most people aren’t making progress or actively reducing their debt right now. They are waiting for circumstances to improve. And while they hold out, their balances continue to grow.

Pay Off Credit Card Debt Through Armed Forces Bank

Hoping for better conditions rarely produces results, but taking proactive steps can create a real change. Armed Forces Bank has served military members, veterans, civilians, and their families since 1907. We understand the unique financial challenges that service members face.

If you are ready to move forward, we can help! Explore your credit card debt relief options:

• VA Cash-Out Refinance: Homeowners with VA loans can access up to 100% of their home equity to consolidate high-interest debts into one lower-rate mortgage payment.
• Personal Debt Consolidation Loan: If you aren’t a homeowner, you can combine your debts into a single fixed-rate loan with more manageable monthly payments.
• Financial Planning Tools: Access free online calculators to estimate your total debt, plan your credit card debt repayment strategy, compare debt consolidation options, and more.
• My Finance360: Track your spending, manage budgets, and monitor debt payoff progress with this free money management platform for Armed Forces Bank clients.
• Expert Guidance: Work with financial advisors who understand military life. Approximately 75% of our team has military connections through service, spouses, or family members.

The reality is simple: Waiting will not solve your debt problems. When you are ready to settle your debt and create a practical strategy, our team is here to assist!

Take the Next Step

Stay tuned for our next article, where we will discuss the role of credit card debt interest rates and the top debt settlement solutions.