Credit card debt remains the top financial challenge for Americans

By Divya Shah

Consumer finance company Happy Money has released its second annual Credit Check-In research, revealing growing divides in financial security across income groups and generations, while highlighting the increasing role of artificial intelligence (AI) in personal financial decision-making. 

Based on a survey of 2,000 U.S. adults, the research found that most Americans remain optimistic about their financial outlook, with 73% expressing confidence in their ability to meet financial obligations.  

However, financial security remains uneven, with 34% reporting they feel less financially secure than a year ago, compared to 31% who feel more secure. 

The findings note widening disparities between higher- and lower-income households. Nearly 45% of respondents earning more than $100,000 annually said they feel more financially secure than a year ago.  

Among households earning less than $100,000; only 29% reported improved financial security, while 36% said they felt less secure. 

Gen Z reported the strongest financial confidence, with 45% feeling more secure than a year ago, while Gen X and Baby Boomers were most likely to report declining financial security. 

“The American consumer continues to show tremendous resilience, but financial progress is becoming more uneven. While many households continue to move toward their goals, others are working harder just to stay in place,” said Matt Potere, CEO of Happy Money.  

The research found that debt continues to be one of the biggest barriers to financial progress. Credit card debt remains the most common form of borrowing, with 41% of respondents carrying outstanding balances.  

Among them, 75% expressed concern about credit card interest rates, including 36% who said they were extremely concerned. 

While reducing debt was identified as one of the top financial priorities for 33% of respondents, many consumers continue to rely on short-term measures rather than structured debt management strategies.  

More than half (55%) of those focused on debt reduction reported cutting spending or delaying major purchases, while only 10% consolidated or refinanced their debt. 

The research also highlighted the behavioural and emotional challenges associated with debt. Among consumers carrying debt, 35% said they felt overwhelmed, stressed or discouraged from acting.  

One-quarter identified these emotional barriers, rather than financial constraints, as the primary reason they had not addressed their debt. 

Debt is increasingly influencing everyday life decisions. Among respondents with outstanding debt, 27% reported delaying savings goals, 26% postponed major purchases, and 20% put off healthcare or dental care due to financial pressures. 

The research also highlights the growing influence of AI-powered tools in personal finance. AI was ranked as one of the most reliable sources of financial advice by 13% of Americans, rising to 17% among Gen Z and Millennials. 

Despite rising adoption, consumers continue to combine AI-generated insights with human guidance. Among those who trust AI for financial advice, 54% also seek support from financial advisers, employers, family members or nonprofit debt counsellors. Only 14% rely exclusively on AI. 

“AI is a great place to start when you want a quick gut check or you don’t want to ask a person the embarrassing question, but it’s not the finish line,” said Matt Tomko, Chief Revenue Officer of Happy Money.  

“People still benefit from having a real plan and trusted guidance. That’s where responsible lenders can play an important role, helping consumers make sense of their options and take meaningful steps toward their financial goals,” Tomko further added.  

The findings suggest that financial institutions have an opportunity to support consumers seeking relief from high-interest debt through digital tools, financial education and personalised lending solutions. 

According to Happy Money, covering daily expenses (38%), building savings (35%) and paying down debt (33%) are the leading financial priorities for consumers in 2026.  

However, the research points to an action gap, with 25% of respondents researching they had taken no steps during the past six months to manage debt or reduce financial stress. 

“The Credit Check-In shows that financial pressure continues to shape everyday decisions for many Americans, from cutting back spending to delaying major purchases and even putting healthcare on the backburner. This isn’t just a debt problem, it’s a life-postponement problem,” Potere said. 

The research comes as financial services providers increasingly explore ways to combine digital lending, debt consolidation and AI-driven financial guidance to help consumers improve financial resilience in a challenging economic environment.