Americans struggling with credit card debt are facing an unprecedented financial crisis in 2025, with households reporting average monthly budget shortfalls of $904, according to GreenPath Financial Wellness. The soaring budget deficit represents more than double the $439 monthly shortfall recorded in 2020, highlighting the mounting pressure from elevated interest rates and rising consumer prices. Credit card debt burdens have intensified as the average interest rate reached 22.3% in November, according to Federal Reserve data.
Rick Bialobrzeski, chief business development officer for GreenPath Financial Wellness, said many households are nearly $1,000 short each month when comparing income to expenses. The Michigan-based nonprofit organization provides free debt counseling to consumers nationwide, revealing that clients seeking help in 2025 face significantly worse financial conditions than five years ago.
Rising Credit Card Debt and Falling Credit Scores
Consumers seeking financial counseling now carry lower credit scores and higher debt-to-income ratios than in previous years. The average credit score for GreenPath clients dropped to 582 in 2025, down from 640 in 2020, placing many borrowers in the subprime category. This decline means struggling households face even steeper borrowing costs, with typical credit card rates reaching 28% for those seeking counseling.
Additionally, lower credit scores limit access to new credit and affordable borrowing options. A score of 582 is considered “fair” or “subprime” by most scoring models, making it difficult to qualify for loans or obtain favorable interest rates.
Why Households Are Turning to Credit Cards
Bialobrzeski noted that most consumers contacting GreenPath are not overspending on discretionary purchases. Instead, many households have relied on credit cards to cover everyday expenses like groceries, utilities, and car payments as affordability challenges mounted in recent years. This pattern creates a destructive cycle where consumers cannot pay balances in full, accumulating interest charges that deepen their financial distress.
However, the lack of emergency savings compounds the problem. Many families turn to credit cards when unexpected expenses arise, further increasing their debt burden and monthly shortfalls.
Debt Management Programs Offer Relief
Nonprofit credit counseling agencies like GreenPath offer debt management programs that negotiate with credit card issuers to reduce interest rates and waive fees. According to Bialobrzeski, these programs can lower credit card interest rates to as little as zero percent, though some may range up to 9.9%. The average monthly payment for participants drops from $589 to $390, with most debts paid off within 50 months.
In contrast, consumers should avoid debt settlement companies that charge large upfront fees or encourage stopping payments to creditors. The National Foundation for Credit Counseling operates a network of nonprofit counselors accessible at nfcc.org or by calling 800-388-2227.
Proposed Credit Card Rate Cap Faces Industry Opposition
In January, President Donald Trump proposed a one-year, 10% cap on credit card rates during a speech at the Detroit Economic Club. Trump stated that current rates are “way too high,” positioning the cap as part of broader consumer cost reduction strategies. Meanwhile, the proposal requires congressional approval, as the president cannot legally impose such restrictions through executive order.
The banking industry has strongly opposed the proposed cap. The American Bankers Association and allied organizations argue that a 10% limit would reduce credit availability, making it impossible for issuers to price for risk and cover operational costs. According to industry estimates, more than 136 million consumers nationwide—representing 73.6% of open accounts—could lose access to credit cards if the cap were implemented.
The National Foundation for Credit Counseling warned that speculation about the 10% cap has created confusion, potentially causing consumers to delay seeking help while waiting for legislative action that may never occur. Bialobrzeski expressed concern that vulnerable consumers relying on credit cards might turn to payday loans or other predatory products if their accounts were closed.
Taking Action Without Waiting for Policy Changes
Financial experts recommend that consumers struggling with credit card debt contact their issuers directly to request lower rates. According to Bialobrzeski, credit card companies often agree to temporary rate reductions ranging from 2% to 12% for three to nine months, providing breathing room to pay down balances. GreenPath worked with more than 65,000 people in 2025 to repay nearly $300 million in debt at reduced interest rates.
As of January, approximately 52,000 consumers were actively enrolled in GreenPath debt management plans. The program charges a one-time $50 setup fee and monthly fees averaging $37, though costs may reach $75 depending on debt amounts and state of residence.
Congressional action on the proposed 10% credit card rate cap remains uncertain, with no clear timeline for legislative consideration. Consumers facing financial hardship should pursue existing relief options rather than waiting for potential policy changes that require congressional approval and face substantial industry resistance.
