The average annual percentage rate for a new credit card offer just hit a record 20.7%.
Americans paid more than $105 billion in credit-card interest and another $25 billion in credit-card fees last year, according to the Consumer Financial Protection Bureau.
But credit-card experts worry that last year’s record is just the start. Consumers will have paid even more credit-card interest and fees once regulators tally up the amounts for 2023, they estimate. The share of credit-card debt that was at least 30 days behind climbed to 7.2%, marking the highest level since the first quarter of 2012, NY Fed data showed.
“With credit-card debt crossing the trillion dollar mark, we will be working to prevent bait-and-switch tactics when it comes to rewards and to increase refinancing activity so consumers can get lower rates,” CFPB Director Rohit Chopra said in a statement. The CFPB report also found that credit-card users are often charged more in interest and fees than they earn in rewards.
Credit cards have helped people steer through inflation and rate hikes, Grano said. But consumers should use competition in the industry to their advantage by shopping for the best rates. Cash-strapped consumers should also reach out to their card issuer because they could be eligible for assistance on their debts, Grano noted.
One proposed CFPB rule would push late-payment fees down to as low as $8, but would allow higher fees if necessary for collection costs. Last year, the average late fee was $32 for both first-time and repeat incidents, Wednesday’s report said.
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