Credit card companies charged consumers more than $130 billion in interest and fees last year, according to a Consumer Financial Protection Bureau biennial report to Congress.
According to the Oct. 25 report, the record charges came as outstanding credit card debt topped $1 trillion for the first time since the CFPB began collecting the data six years ago. Annual credit card spending grew to $3.2 trillion as more consumers reportedly carried credit card balances month to month, with many going deeper into debt over time. According to the bureau, credit card company profits increased by nearly 6 percent last year, lower than the 9.6 percent in 2021 but higher than 4.5 percent in 2019.
“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,” Chopra added.
Cardholders carried $5,300 in average credit card balances, roughly the same as before the pandemic. Consumers who carried a month-to-month balance paid roughly 20 percent of their average balance in interest and fees in 2022, including 18 percent of annualized balances on general purpose cards and 21 percent on private label accounts. Those customers also paid 94 percent of total interest and fees charged but only earned 27 percent of rewards at major credit card companies.
According to the report, consumers were charged $14.5 billion in late fees, coming closer to pre-pandemic levels and up from $11.3 billion in 2021. “Late fees continued to be the most significant fee assessed to cardholders in both dollar amount and frequency,” the CFPB 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.”