Where the Money Is and Isn’t: Income Segments Are Shaping Credit Card Economics

Spending at the consumer level has remained strong in recent years despite economic headwinds that may suggest otherwise.

But a closer look at the numbers reveals that people with higher incomes are driving spending levels in the U.S. while lower-income consumers are carrying higher levels of credit card debt, according to a new policy perspective from the Federal Reserve Bank of Boston.

To maximize profits, credit card portfolio managers responsible for growing revenues at their companies will want to understand how different consumer segments are spending and managing debt. 

Consumer spending is a key measurement in U.S. economics, representing nearly 70% of U.S. GDP, according to the Federal Reserve Bank of Boston.

The Boston Fed examined credit card spending data from the last 10 years and found that “real spending growth by the higher income groups — especially the top earners — has remained robust.” Though consumers with lower incomes increased their spending in 2021 and 2022, their spending has grown only “modestly” since then.

Consumer spending accounts for nearly 70% of U.S. GDP, according to the Federal Reserve Bank of Boston.

The study defines low-income consumers as those making up to $39,000 annually and high-income individuals as those making at least $121,000 per year.

We checked in with Primerica Economist Amy Crews Cutts to get the scoop on the middle class. Cutts told us that “39% of middle-income Americans say they’re using credit cards more because their income hasn’t kept pace with the cost of living.”

High-income spending patterns may be hiding financial struggles among lower-income consumers, especially when it comes to managing credit card debt.

Credit card issuers may be happy to hear that their wealthier customers are consistently reaching for their cards, since more spending means more interchange revenue. But relying too heavily on high-income users may not be a long-term solution.

“Relying on a narrow cohort of wealthy consumers to fuel demand is risky,” Chad D. Cummings, Founding Attorney and CEO of Cummings & Cummings Law, told us. “High-income spending could quickly pull back if asset markets falter or confidence erodes.”

In 2025, the threat of asset markets suddenly dropping feels like something that could happen at any moment. President Donald Trump set numerous tariffs on U.S. trading partners throughout the first half of the year, and more may be on the way.

Various market indices quickly lost value in response to those tariffs. The S&P 500 fell by 12% and the Dow Jones Industrial Average plummeted by 10% in the aftermath of the tariffs Trump announced on April 2.

Stocks have since recovered those losses, but tariff talk continues to make headlines. And credit card issuers should note that their most reliable customers, high-income spenders, may cut back on spending should tariffs rock the markets again.

Credit card issuers also earn revenue on the interest people pay when they carry a balance on their cards from one statement period to the next. 

The Boston Fed study reveals that the current credit card debt level for low-income people “is close to the level implied by the pre-pandemic trend,” which is “the level that would have prevailed if credit card debt had continued to grow at the pre-pandemic pace.”

Conversely, the credit card debt levels of people with higher incomes are lower than they were during the period before the pandemic. 

And Cutts told us that “only 32% of middle-income Americans say they typically pay their full credit card balance each month,” and 31% say their card balances have increased over the past three months.

When credit card issuers notice that more of their customers with low incomes are refraining from paying their card balances in full each month, it can cause them to adjust their strategies.

People with lower incomes and, ostensibly, a lower level of savings, may be at a higher risk of defaulting. 

Credit card issuers may need to reassess their customer bases as default risks rise. Stricter underwriting could help keep anticipated losses from becoming actual ones.

And some issuers appear to be taking that very step. A new PYMNTS report says that “banks have begun making it harder for lower-income consumers to get cards, raising their criteria for new cards rather than lowering them.”

Data shows that those efforts may be paying off. The average credit card delinquency rate in the U.S. moved slightly higher from June to July, according to PYMNTS. But the rates remain below marks set in July 2024 and in July 2019, before the onset of the pandemic.

Credit card issuers have made obtaining a new credit card tougher for low-income consumers in 2025.

Tightening underwriting standards isn’t the only lever issuers can pull to ward off potential increases in default rates. They can also offer education to customers that helps them improve their approach to money management.

“Financial institutions should improve early intervention for at-risk borrowers,” Cummings told us, adding that counseling can help people “avert debt spirals.”

“Over the long-term, fostering wage growth and economic inclusion will broaden the consumer base and reduce overreliance on the wealthy,” he continued.

Finding new ways to effectively get information in front of customers can also help issuers better serve middle-income consumers. 

Cutts told us nearly a quarter of people in that segment “don’t know what interest rate they’re being charged — a knowledge gap that can quietly fuel long-term debt.”

Credit card issuers who refuse to take steps to help customers who don’t have high incomes may risk losing their business to other payment products, including debit cards and buy now, pay later tools.