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Minimum payments are driving Americans’ ballooning credit card debt, and that’s just part of the problem.
More than 4 in 10 US credit cardholders typically make the minimum payment each month, jumping to nearly 6 in 10 for Gen Z adults, according to a new report from LendingTree.
“Job No. 1 for any credit cardholder is to pay their balance off as soon as possible,” Matt Schulz, chief consumer finance analyst at LendingTree, told Yahoo Finance. “In most cases, for most people, paying just the minimum is a bad idea. When minimum payments become the norm, it’s often a sign that people are stretched thin and running out of wiggle room.”
What’s worse: Nearly 6 in 10 cardholders believe carrying a small balance helps their credit score.
It doesn’t.
“While every credit report and score is unique, generally speaking, it’s not true that carrying a balance helps your score,” Schulz said. “In fact, the opposite is more likely to be true. Along with being expensive, carrying a balance can do real damage to your credit picture.”
Read more: How long does it take to build credit from scratch?
Meanwhile, more than a quarter of cardholders say they don’t need an emergency fund because they rely on credit cards — including 43% of Gen Zers.
And it gets worse. About half of cardholders don’t know the interest rate on any of their credit cards. Shockingly, even older cardholders fall short on this one — nearly 60% of baby boomers and about half of Gen Xers don’t know any of their credit cards’ interest rates, versus 35% of millennial cardholders and 33% of Gen Zers.
The stats are especially disturbing for Gen Z, considering that more than 25% of those with a FICO score opened at least one credit card in the past year — the highest rate of any age group.
And many are opening cards to use as a financial cushion as the cost of living accelerates. “If your choice is between keeping the lights on and food on the table or paying above the minimum on a credit card, don’t worry about the credit card,” Schulz said.
Read more: Find the best 0% APR credit cards for April 2026
For those who regularly carry a credit card balance and are in the dark about what their credit card interest rate is, that’s a game changer — and not in a good way. The average credit card interest rate in the US was 23.72% last month.
“If you never carry a balance, your card’s interest rate is largely irrelevant,” he added. That’s because interest typically only accrues if you don’t pay your bill in full each month.
But nearly half of cardholders carry a balance.
Here’s an easy first step to cut your credit card debt: Call your credit card issuer and ask for a lower interest rate, pointing out your history of on-time payments.
