Updated – March 26, 2019
Credit card balances are at all-time highs. Rate increases by the Federal Reserve will mean consumers pay billions more in interest charges.
We’ve updated our statistics on credit card debt in America to illustrate how much consumers are now taking on.
- Americans paid banks $113 billion in credit card interest in 2018, up 12% from the $101 billion in interest paid in 2017, and up 49% over the last five years, as Fed rate increases have been passed on to consumers. MagnifyMoney analyzed FDIC data through December 2018 for each bank whose deposits are insured by the FDIC.
- The four Federal Reserve rate increases in 2018 meant most credit card Annual Percentage Rates (APRs) increased a full percentage point more last year. Even without any interest rate increases in 2019, we estimatethe increase in interest paid in the coming will continue to grow, putting Americans on track to pay over $122 billion in interest in 2019, an additional $9 billion more than the $113 billion currently being paid annually. Our analysis of the impact of Fed rate hikesfound credit card rates are the most sensitive to Fed rate hikes, rising more than twice as fast as mortgage rates.
- Average APRs on credit card accounts assessed interest are now 16.86%, up nearly 4 percentage points in five years, according to the Federal Reserve.