Commercial banks are being urged to tighten their credit card lending practices after outstanding balances climbed to a record $94 billion, with one economist warning that the trend could push more households into financial distress.

Bank of Jamaica (BOJ) data show that commercial banks’ credit card receivables more than doubled in nominal terms, rising from $40.2 billion in 2017 to $94 billion as at April 2026. The central bank’s record shows 435,883 credit cards were in circulation at the end of 2025.

Economist and researcher Janiel McEwan in an interview with the Jamaica Observer said that while consumers must take responsibility for managing their finances, financial institutions should also shoulder some of the blame for encouraging borrowing through aggressive marketing and automatic credit-limit increases, while charging what he described as some of the highest credit card interest rates in the region.

“Banks have made borrowing much easier to say yes to, which from a marketing perspective is not inherently harmful, but they also have a fiduciary responsibility to ensure that they are lending responsibly. If they know someone is consistently struggling to meet repayments, there should be programmes to restructure those obligations before the debt spirals out of control,” he told the Business Observer.

“Credit by itself is not the enemy. Used wisely, it can open doors to opportunity. But without proper understanding, it can become a burden,” he added.

McEwan said the persistent rise in credit card balances could not be attributed solely to reckless spending, pointing to a combination of stagnant wage growth, persistent inflation, high transportation and living costs, and elevated borrowing costs as contributing factors.

“Wage growth is not keeping pace with the cost of living for many people. As such credit cards have increasingly become a backup plan or a social safety net for many households that are trying to manage everyday expenses,” he said, adding that credit card debt in Jamaica has not spiked overnight but has climbed steadily for about a decade, interrupted only briefly by the pandemic, with growth accelerating since 2023.

McEwan said annual credit card interest rates in Jamaica typically range from 35 and 40 per cent, which he contrasted with average rates of about 20 per cent in the United States.

“These interest rates are among the highest consumers will encounter in the financial system. Once people are unable to pay the balance in full, the debt accumulates very quickly,” McEwan noted.

Criticising what he described as aggressive marketing practices by some financial institutions, he said consumers are routinely encouraged to take up new credit cards or accept higher credit limits while receiving little guidance on responsible borrowing.

“They tell you that you can get the card without paying anything upfront and encourage you to spend beyond your income. But many people do not fully understand how interest compounds once the payment period expires,” he said.

Stressing the need for lenders to undertake more robust affordability assessments before issuing cards or increasing credit limits, McEwan deemed this a more worthwhile strategy than relying primarily on customers’ banking relationships.

“They should not simply look at someone’s salary and decide they qualify for a larger limit. Banks need to determine whether that person can realistically service the debt,” he said.

While acknowledging that lenders face genuine risks from loan defaults, he argued that profitability should not come at the expense of responsible lending.

As he called on the central bank to strengthen oversight of consumer lending, he said there is an immediate need for the BOJ as regulator to require that financial institutions adopt stricter affordability standards and more responsible credit practices.

Beyond regulation, McEwan also said Jamaica urgently needs financial literacy programmes that focus specifically on the responsible use of credit rather than general savings education.

“We have spent years promoting saving, but we also need to teach people how credit works, how interest accumulates and the long-term consequences of carrying balances month after month,” he said.

He argued that financial education should begin at an early age and become a core part of the local school curriculum, while public awareness campaigns should also be rolled out to target existing credit card users.

McEwan suggested that while higher-income earners may use credit cards strategically to earn rewards while investing their cash elsewhere, much of the country’s growing credit card debt is likely concentrated among middle- and lower-income households struggling with rising living costs.

“The people who understand credit tend to use it as a financial tool. The concern, however, is with those who are relying on it simply to make ends meet,” he said.

While stopping short of declaring that Jamaica has entered a full-scale debt crisis, McEwan warned that current trends suggest the country is moving in that direction if borrowing continues to outpace repayment.

“When one looks at the size of the outstanding balance, the number of repossessions by banks now taking place and the financial pressures households are facing… we are moving dangerously close to a debt crisis,” he said.

To this end, he urged banks to adopt more responsible lending practices and to tailor credit limits that are in line with the customers’ ability to repay and where possible to offer debt restructuring options for those borrowers showing signs of financial distress.

“Financial institutions should also be more considerate in deciding who gets a credit card and also what limit they receive. Better guardrails now could help to prevent much bigger problems later,” McEwan concluded.