Consumers are still leaning heavily on credit cards, but the latest Federal Reserve household debt data suggests a growing number may soon be looking for ways to turn revolving balances into more manageable monthly payments.
The latest New York Fed Household Debt and Credit Report, from Tuesday (May 12), showed household debt reached $18.8 trillion in the first quarter, up 3.2% year over year. Credit card balances rose 5.9% to $1.25 trillion, maintaining the same pace seen over the past several quarters even after the post-pandemic borrowing surge cooled.
At the same time, delinquency pressures continued building.
Aggregate delinquency levels remained elevated, with 4.8% of outstanding debt in some stage of delinquency. Credit card 90-plus-day delinquencies in particular rose to 13.1%, placing that statistic at a 15-year high. Auto loan delinquencies also remained at multiyear highs, while student loan delinquency rates moved higher following the resumption of repayment obligations.
A Balancing Act
The data points to consumers who are still spending, but with less room for error.
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There are now an estimated 647 million credit card accounts in the U.S., up 28% over five years, while balances over that same period have climbed 59%. Even with balance growth stabilizing, the underlying debt load remains historically large. Credit card balances currently account for 23% of available credit, a figure the Fed said has remained largely unchanged over recent quarters.
That matters because consumers entering a period of slower wage growth, elevated living costs and higher borrowing expenses may seek repayment structures that provide predictability rather than open-ended revolving debt exposure.
Pressure on Traditional Revolving Credit
The Fed report, and specifically delinquency stats, signal the kind of sustained repayment pressure that could push more borrowers toward fixed-payment options.
Younger consumers appear especially exposed. Adults ages 18 to 29 registered the highest percentage of consumers transitioning into serious delinquency, both overall and among credit card borrowers specifically.
Meanwhile, the broader composition of debt has remained relatively stable, suggesting the issue is less about sudden borrowing spikes and more about the long tail of balances accumulated over the past several years. Mortgages, which account for roughly 70% of household debt, continued to grow at a slower pace than in previous quarters, while credit card debt growth held steady.
For issuers, the challenge centers on how to keep consumers engaged while reducing the risk that revolving balances become unmanageable.
That is where installment lending enters the picture.
Installments Gaining Traction
Separate PYMNTS Intelligence data suggests consumers are already becoming more comfortable using installment structures tied directly to their credit cards.
According to the April 2026 PYMNTS Intelligence Pay Later Ecosystem Report, consumers used credit card installment plans at more than twice the rate of buy now, pay later (BNPL) products across eight surveys conducted between April 2025 and March 2026. Card installment plan usage rose from 23% in April 2025 to 36% by March 2026, while BNPL adoption opened at 15% and remained comparatively flat.
The report frames the shift less as a rejection of BNPL than as a sign that consumers prefer installment features embedded within existing card relationships.
Younger consumers stood out in particular. PYMNTS Intelligence found Gen Z consumers used credit card installment plans at significantly higher rates than BNPL products by early 2026. Millennials and bridge millennials followed similar patterns.
For banks and card issuers, the read-across from both sets of data offers a roadmap towards opportunity and an expansion of products and services.
The Fed’s numbers show persistent stress in revolving credit performance, especially among younger borrowers. PYMNTS Intelligence data, meanwhile, shows consumers embracing fixed-payment installment structures attached to existing card accounts.
The reports point toward a credit market where flexibility may become a more important competitive tool. Installment features allow issuers to keep spending inside their own ecosystems while giving consumers a clearer repayment timeline at a moment when balances remain elevated and delinquency pressures continue climbing.
