By Thomas Dichter
Monday, February 09, 2026
In 2025, U.S. credit card debt reached $1.3 trillion.
This is the equivalent of over $3,000 in debt for every man, woman, and child
in the United States. Imagine a newborn baby named Louise Smith having $3,000
in debt, along with each of her three siblings and her two parents—the
hypothetical Smith family’s total credit card debt would amount to $18,000.
In the American economy, the outsized role of consumer
credit and its accompanying debt is something relatively new. Credit cards
began appearing in the 1960s and were not in widespread use until the 1980s.
The Federal Reserve did not even record credit card debt until January 1968,
when the figure was $1.316 billion. The 2025 figure was $1.305 trillion.
If we add in a more recent variation of consumer
credit—“Buy Now Pay Later” (BNPL)—consumer credit, and its attendant debt,
climb ever higher. About half of Americans have used the BNPL form of credit,
and between 2019 and 2023 the BNPL industry grew from $2 billion to $120 billion, a 690-fold increase in four
years. Though BNPL debt has been called “phantom debt” because much of it goes
unreported, the amount of BNPL debt outstanding is still estimated
to be about $700 billion.
In any case, just credit card and BNPL debt taken
together amount to roughly $2 trillion in the United States today. Almost half
of American credit card holders carry debt on their cards, and almost a
quarter of those cardholders say they don’t think
they’ll ever pay it off. Yet the extent of consumer credit in America and the
huge amount of debt incurred with it, has raised no great alarm.
But it should. The advent of widespread consumer credit
in the last half-century has carried with it, and may well have caused, an
almost seismic shift in our cultural norms; from thrift to carefree spending,
from debt as shameful to debt as no big deal. More importantly, consumer
credit, which props up the 70 percent of our GDP that is basically “shopping,”
has played the role of a great class leveler. For the large number of Americans who rely on
consumer credit to supplement their income, what might otherwise be a general
outrage at income inequality (with a focus on the rich) appears to have been
numbed by easy credit.
***
The Occupy Wall Street movement of more than a decade ago
is instructive here. Though it might seem a good example of populist outrage
against the rich, looking at it in detail suggests that may not be the case; it
is the exception that proves the rule. Protesters took over Zuccotti Park in
New York City in September 2011, as well as parks and plazas in many other
cities. In Washington, D.C., where I live part of each year, I regularly walked
through the encampment at Freedom Plaza on Pennsylvania Avenue on my way to
work. In talking with many of the protesters, and noting one of their key
slogans “We are the 99%,” my impression was that the majority of the people
camping out were a lot closer to the 1 percent than they wanted to admit. Richard Reeves, in his book Dream Hoarders:
How The American Upper Middle Class Is Leaving Everyone Else In The Dust, Why
That Is A Problem, And What To Do About It corroborates that impression,
noting that more than one-third of the protesters in the May Day Occupy march
in 2011 had incomes greater than $100,000. Indeed, the “eat the rich” populism
I observed on Freedom Plaza seemed a minority position. And by February 2012,
the D.C. occupiers were gone.
Francis Fukuyama has argued that populism for the
majority is not about any economic plight but about a sense that they are
neither recognized nor respected. Their grievance, that of the real “99%”
which includes many on the MAGA right, is not about capitalism, or the rich as
economic oppressors, but about the coastal cultural elites. It is these elites
who are the culprits; resented not because of their money (the elites are not
necessarily rich) but because it is believed that they look down on and
disrespect “regular” folks. As for the
real rich, Americans who are not doing well financially do not seem to resent
them.
One likely reason for the lack of an animus toward the
rich is that buying on credit can enable the non-rich to have a life of instant
gratification; no need to deny oneself the pleasures of restaurants, travel, or
satisfying the whims of one’s children—in short, one can obtain a lifestyle
that, if one doesn’t look too closely, can seem like that of rich people.
The provocative economist Thorstein Veblen, in his 1899 Theory
of the Leisure Class, put the lie to Karl Marx’s conviction that the
workers would recognize their oppression by rich owners and rise in revolt.
Instead, Veblen’s worker seeks to emulate the rich. (Had Veblen lived to the
end of the 20th century, he might well have cited the popularity of Lifestyles
of the Rich and Famous, which ran for a decade.) Access to consumer credit
(almost 80 percent of Americans hold at least one “general purpose” credit
card) not only helps maintain the illusion that we are all the same, it plays a
role in suppressing any tendency to revolt.
It is interesting that James Carville, the Democratic
campaign guru turned pundit, recently
suggested that the time may be ripe for a revolution
in America: “If you’re a student of history, the French Revolution is in the
American wind. While the stock market soars, Mr. Trump and decades of corrupt
and morally bankrupt Republican economic agendas have splintered the very heart
of the American economy. … Le peuple se lève.” Given the huge and
growing gap dividing the richest from the rest of us, one might indeed be
excused to think that the “rest” (the majority of Americans) might rise up. In
France—always a great choice for invidious comparisons—protesters in September 2025
carried signs reading: “Tax the rich,” “There’s no real trickle-down,” “Abolish
privileges,” and “Empty the pockets of the rich to fill the hole in social
security.”
In contrast to the U.S., the French still rely on checks
and cash, and many who use cards use debit cards. Statistics vary, but a rough
estimate is that the French hold roughly three times the number of debit cards
as they do credit cards, and per capita credit card use in the U.S. is nine
times greater than in France.
The French relationship to money is also more ambiguous
than ours. Many people I know in France—where I live for half of the year—think
that no one should get super rich. Still, there are billionaires in France, 52
of them, but as a percent of population that is 3.5 times less than in the
U.S, which currently boasts 900 billionaires. For many French people, money is
necessary to live, but security—a steady salary and a pension, and especially
not having to worry about health care—is valued more than the accumulation of
money. It is impolite in France to talk about one’s income, much less ask
someone what they make. The average French person resents the “rentier,”
someone who makes his or her money from property or dividends and capital gains
as opposed to those who earn their
income from “honest” work. And while unionization has declined significantly in
the U.S., it
remains strong in France, reflecting (and contributing to) a greater sense
of class consciousness.
Actual income inequality in France is also far less than
in the U.S.—and in fact, income inequality in France has decreased
significantly in the last 100 years—and yet the French
protest. In the U.S. income inequality has increased, and yet the majority of
Americans do not seem to support a fairer distribution of wealth.
Indeed, there are few signs of a populist revolt against
the rich, not to mention against the political economy that enables their
growth. And this is despite rather striking data on inequality. Per one New
York Times report,
69 percent of America’s wealth is held by families in the top
10 percent. The investments held by those families have grown about
threefold, from roughly $15 trillion in 2010 to more than $45 trillion today.
Between 1989 and 2022, households in the top 1 percent added about 100 times as
much wealth as households at the national median, according
to Oxfam, and almost 1,000 times as much as a household in the 20th
percentile.
The wealth of our 900 American billionaires has also continued
to increase (an 18 percent leap in 2025). Yet, to
vindicate Veblen, 69 percent of respondents in a
2019 Cato Institute poll believed that billionaires
“earned their wealth by creating value for others.” The majority of those
respondents also agreed that “we are all better off when people get rich.”
While that sentiment seems to have softened a bit—more people now
believe the rich ought to be taxed more than they
are—we are clearly far from a revolution. On the contrary, aside from
expressing dissatisfaction about affordability at the polling booth, we
continue to chug along as if all is basically okay.
***
Enter consumer credit. Let’s start with its role in how
we spend. About 70 percent of our gross domestic product is based on consumer
spending, which reached $16.35 trillion in June 2025, up from $1.35 billion in 1947 (adjusted for inflation, this is a more than 800-fold increase
compared to the less than three-fold increase in population in the same period;
from 144 million to 342 million.) In terms of percentage of GDP, our spending
on consumption during those years went from half of 1 percent of GDP to 70
percent. About 70 percent of retail purchases are done on credit. And since so
many of us spend with money we don’t really have (consumer credit) we naturally
run up debt.
Easy consumer credit, and the almost inevitable debt that
accompanies it, dovetails with a major shift in our moral compass. Being in
debt used to be shameful. In the case of credit card or BNPL debt, as long as
the monthly minimum is paid, not only is there no criminal penalty, there is
little shame associated with it. Moreover, credit card debt especially can
appear to the individual debtor as benign, or even unnoticed. With an unpaid
rolling balance of $5,000 to $10,000, the bank issuing the card is not going to
dun you. On the contrary, it is in the bank’s interest not to have you pay it
off. As long as you pay the monthly minimum, and of course absorb the 20
percent or more interest, the illusion that all is well is easy to maintain.
Affordability is on everyone’s mind these days, but
consumer credit has rendered the concept a bit more complicated than just the
price of goods. In the past what was “affordable” was related to the money one
had on hand. If you had $45 of disposable surplus money, you could afford to
buy something that cost $45. The expansion of consumer credit has eliminated
that connection. Americans have by and large lost the notion of thrift. The
very term “thrift,” which was used in the naming of quite a few banks in the
past, captures the moral basis of savings. In 1910 the Morris Plan
Thrift bank came along, making consumption loans to
working-class people based on peer references and one’s personal
character—loans made without collateral.
By 1931, Morris institutions existed in 142 cities. But
this was not easy credit. The payment terms were strict because debt was to be
avoided. Not only did borrowers have to pay fees and interest, they were
required to buy “Class C Installment Thrift Certificates” weekly to pay off the
loan, and in the event of default, the two people who had provided peer
references would have to pay off the loan. The linkage of consumption and
saving remained strong well into the second half of the 20th century.
The first general purpose credit card was the
BankAmericard in 1958. Early credit cards had to be applied for and not
everyone qualified. Only in the 1980s did credit cards begin to become easily
available, and part of the credit expansion in the 1980s had to do with the
issuing of unsolicited
credit cards to college students. While the rationale
was ostensibly to engage people with high earning potential early on in their
careers, the card issuers must also have understood that young people are
particularly susceptible to the temptation of buying something one cannot
immediately afford. Four decades later, in 2025, close
to three-quarters of all retail purchases were done
using credit cards.
If your income is inadequate to buy what you want, you do
not have to feel inferior to wealthier people since you can have what they
have, or at least a version of it, and you can have it right away. If the rich
have dedicated home theaters with surround sound and 1,000 square-foot gyms in
their mega mansions, you can have a 100-inch TV in your living room and maybe
even a Peloton in the basement. Having these markers of the good life, things
that symbolize “luxury,”— can take the edge off any sense of shame in not being
rich. With a credit card (and other forms of consumer credit like BNPL), one
does not have to forgo the things one can’t afford. Indeed, it seems plausible
that while many lower and middle-income people see the unfairness of the system
in the abstract, they do not actually “feel” it. With a couple of credit cards
in your wallet, eating the rich seems less appetizing.
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