If you noticed you’ve been getting charged higher interest on your credit card, you’re not alone.
The Consumer Financial Protection Bureau found that in 2022 credit card companies charged consumers more than $105 billion in interest and more than $25 billion in fees.
And more people are carrying debt.
Total outstanding credit card debt eclipsed $1 trillion for the first time since the CFPB began tracking the data. The bureau was created in 2011.
The agency said these trends are “areas of concern” as more consumers carry balances month to month.
Many consumers are “falling deeper into debt over time, while credit card company profits remained significantly above pre-pandemic levels,” according to a report released this week.
“Last year, Americans paid $130 billion in interest and fees on their credit cards,” said CFPB Director Rohit Chopra said. “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.”
The average credit card balance was around $5,300 in 2022.
Industry profits remain high. The report found that major credit card companies’ profits are now higher than pre-pandemic levels, “potentially signaling a lack of competition in a market consistently dominated by the top 10 credit card companies.”
Profits for general purpose cards reached 5.9% in 2022, compared to 4.5% in 2019. Profits had peaked at 9.6% in 2021.
Companies are setting higher annual percentage rates far above the cost of offering credit, according to the report.
“Major credit card companies continue to set interest rates far above major indexes like the federal funds target rate, with an average APR margin of 15.4 percentage points above the prime rate in 2022,” the bureau found. “Margins continued to rise for across all credit score tiers, even as charge-off rates fell during the pandemic.”
Carrying a balance month to month can add up.
Consumers paid about 20% of their average balance in interest and fees over the course of 2022. Meanwhile, cardholders with subprime scores paid 30 to 40 cents in interest and fees per dollar borrowed each year, the CFPB found.
Last year, consumers who carried debt from month to month paid 94% of total interest and fees charged but earned just 27% of rewards at major credit card companies, the report said.
Consumers who were able to stay on top of payments saw a bigger payoff.
Consumers who paid their balances off each month paid just 6% of interest and fees charged and earned 73% of total rewards, the report said.
Getting caught with late fees can mean a big hit to the bank account.
“Late fees continued to be the most significant fee assessed to cardholders in both dollar amount and frequency,” the report stated. “More consumers are facing difficulties paying their credit card bills on time, with delinquency rates rising since the end of pandemic relief programs in 2021.”
Stephanie Ritenbaugh is a Tribune-Review staff writer. You can contact Stephanie at email@example.com.