The Consumer Financial Protection Bureau (CFPB) has published its 6th report on the consumer credit card market, stating that consumers paid record-high fees and interest in 2022.
Interest rates have been marching higher in the past months as the US Federal Reserve attempts to crush persistent inflation. The rapid rise in prices was caused by loose credit and the combination of excessive government spending – something that is making the Fed’s job even harder – as government programs are inflationary. Of course, this pain is passed onto consumers who must pay more for just about everything. Credit card interest rates have jumped higher along with the Fed’s rate increases – making credit much more expensive.
The CFPB states that in 2022, credit card companies charged consumers more than $105 billion in interest and more than $25 billion in fees. Total outstanding credit card debt topped $1 trillion for the first time since the CFPB began collecting this data.
For consumers who floated a balance (did not pay off the card each month), they paid about 20% of their average balance in interest and fees over the course of the year. For cardholders with subprime scores, they frequently paid 30 to 40 cents in interest and fees per dollar borrowed each year.
The report said that the total average credit card balances per cardholder stood at about $5,300, about the same as before the pandemic.