By Charlene Crowell –
More cardholders are being charged late fees, falling behind on payments, and facing higher costs on growing debt.
For the first time since the Consumer Financial Protection Bureau (CFPB) began collecting credit card data, the nation’s related debt reached $1 trillion in 2022, an all-time high. New research released in late October examines how and why this debt grew, but also how emerging trends in card usage affect the day-to-day lives of consumers.
While companies charged consumers more than $105 billion in interest and more than $25 billion in fees, average credit card balances per cardholder returned to about $5,300, about the same as before the pandemic. At the same time, more cardholders are being charged late fees, falling behind on payments, and facing higher costs on growing debt.
Today nearly one in 10 consumers is caught in what CFPB terms “persistent debt,” charged more in interest and fees than they pay toward the principal owed, a pattern that makes each passing month’s charges increasingly harder to avoid. Average credit card minimum payments on revolving credit accounts now reach over $100 per month and are also a contributing factor to rising late fees and overall debt.
“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,” said CFPB Director Rohit Chopra.
Increased indebtedness also translated into record industry profits, now higher than those reached in pre-pandemic years. Two key factors, according to the report, significantly contributed to industry profitability: an average APR margin of 15.4 percentage points above the prime rate in 2022, and domination of the marketplace by only 10 credit card companies.
Although the nation has nearly 4,000 credit card issuers, four-fifths—80%—of the card activity was with one of the firms in the top 10.
The…
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