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Credit card<\/a>\u00a0balances fell in the first quarter of 2026, decreasing by $25 billion to $1.25 trillion, according to a\u00a0new report on household debt<\/a>\u00a0by the Federal Reserve Bank of New York released Tuesday. Still, that’s a 5.9% jump from a year earlier.<\/p>\n At the same time, mortgage debt<\/a>, auto loans<\/a>, and home equity lines of credit were all higher, the New York Fed found. <\/p>\n Overall, “household debt levels rose slightly, with modest increases in most debt types offsetting a seasonal decline in credit card balances,” Daniel Mangrum, research economist at the New York Fed, said in a statement. <\/p>\n Near the end of the year, credit card debt often ticks higher as consumers increase their spending during the peak holiday shopping season. Then it typically falls in the first quarter. <\/p>\n Read more CNBC personal finance coverage<\/p>\n Despite the decrease in credit card debt, soaring gas prices<\/a> have increasingly strained household budgets. <\/p>\n A gallon of regular gas averaged $4.50 nationally on Tuesday, up from about $3.14 a year ago, according to AAA<\/a>.<\/p>\n A separate New York Fed<\/a> report from earlier this month found that while high-income households maintained their level of spending in March, low-income families were forced to cut back on their gas consumption and still felt increased financial strain.<\/p>\n “Spending growth overall has been going up,” the New York Fed researchers said on a press call Tuesday. However, there is evidence of the ‘K-shaped’<\/a>\u00a0economy in credit card balances, they said. <\/p>\n “Americans are generally on pretty stable footing, overall, but we do see some weakness in lower-income households,” the researchers said. “We do see some of this in our delinquency rates,” they added, referring to the share of borrowers falling behind on payments.<\/p>\n Runstudio | The Image Bank | Getty Images<\/p>\n In an increasingly bifurcated economy, this divergence is likely to persist, according to Christian Floro, market strategist at Principal Asset Management.<\/p>\n “A subset of consumers, primarily subprime borrowers, has driven most of the increase in delinquencies, while prime borrowers have experienced only a marginal deterioration in credit performance,” Floro said.<\/p>\n However, “the latest gasoline price shock could push delinquencies higher,” he added.<\/p>\n ‘Credit card spending is through the roof’<\/p>\n Last week, National Economic Council Director\u00a0Kevin Hassett said that spending on credit cards<\/a> was an indication that consumers had more money in their pockets. <\/p>\n “Credit card spending is through the roof,” Hassett said to Maria Bartiromo on Fox Business. “They’re spending more on gasoline, but they’re spending more on everything else, too.”<\/p>\n More than half \u2014 53% \u2014 of consumers carry credit card balances to cover essential expenses, according to a separate report by debt management company\u00a0Achieve<\/a>\u00a0released Tuesday.<\/p>\n “For many households, higher balances are less a sign of economic optimism and more a sign that wages and savings are struggling to keep pace with essential expenses like groceries, utilities and housing,” Austin Kilgore, analyst for the Achieve Center for Consumer Insights, said in a statement. <\/p>\n Among those falling behind, 57% of borrowers said it would take six months or longer to pay off all their credit card debt, the survey of 2,000 consumers found.<\/p>\n