Americans Pay $120 Billion in Credit Card Interest, Fees Each Year

At almost a trillion dollars outstanding, credit cards are the largest consumer lending product by number of users – over 175 million consumers have at least one credit card – and one of the largest sources of consumer debt. From 2018 to 2020, the CFPB estimates that Americans paid roughly $120 billion per year in credit card interest and fees. That works out to about $1,000 per year for every American household. During the pandemic, credit card debt started to decline as many households reduced their borrowing and paid down more. But, as the economy has improved, credit card debt is on the rise again.

While the credit card market is enormous, it is among the more consolidated markets for consumer financial products. Just eight big financial players control 70% of the total balances of the market—and the credit card business is often a significant contributor to their bottom line. Compared to other forms of widely accessed credit, credit cards have interest rates that are relatively expensive for consumers. Indeed, from 2015 to 2019, the average assessed interest rate on credit cards increased by more than 20% (from 13.7% to 16.9%).

Given the outsize role that credit card debt plays for many households, the CFPB is looking to ensure that there is robust and fair competition in the credit card market. Even small improvements in this market can have significant impacts on American families. Here are three ways that the CFPB will focus on ensuring a more fair, transparent, and competitive credit card market: 

• Uncover unfair, anticompetitive practices; 
• Make it simpler to compare, switch, or refinance your credit card; and
• Scrutinize junk fees.

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