Consumers paid more than $105 billion in interest and more than $25 billion in fees on their credit cards in 2022, according to a report by the Consumer Financial Protection Bureau (CFPB) on the consumer credit card market.
![](https://financialregnews.com/wp-content/uploads/2023/07/shutterstock_519735628.jpg)
Further, it revealed that total outstanding credit card debt eclipsed $1 trillion for the first time since the CFPB began collecting this data. Overall annual spending on credit cards increased to $3.2 trillion.
“Last year, Americans paid $130 billion in interest and fees on their credit cards,” said CFPB Director Rohit Chopra. “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.”
Among the findings, the report found that credit card company profits are now higher than pre-pandemic levels. Profits for general purpose cards reached 5.9 percent in 2022, as measured by annual return on assets, compared to 4.5 percent in 2019, after peaking at 9.6 percent in 2021.
Also, annual percentage rates (APRs) continue to rise far above the interest rates for major indexes like the federal funds target rate, with an average APR margin of 15.4 percentage points above the prime rate in 2022.
In addition, it revealed that consumers paid about 20 percent of their average balance in interest and fees over the course of the year, which breaks down to 18 percent of annualized balances on general purpose cards and 21 percent on private label accounts. Many cardholders with subprime scores paid 30 to 40 cents in interest and fees per dollar borrowed each year. Further, consumers were charged $14.5 billion in late fees, up from $11.3 billion in 2021.
The report also found that total average credit card balances per cardholder returned to about $5,300, about the same as before the pandemic. And, consumers who carried debt from month to month paid 94 percent of total interest and fees charged but earned just 27 percent of rewards at major credit card companies. Consumers who paid their balances off each month paid just six percent of interest and fees charged and earned 73 percent of total rewards.
In addition, a greater percentage of balances are going more than 180 days delinquent while nearly one-tenth of credit card users find themselves in “persistent debt” where they are charged more in interest and fees each year than they pay toward the principal.
The report also revealed a continuing shift toward digital communication as nearly 80 percent of cardholders are enrolled in their card’s mobile app, with adoption rates even higher for consumers under 65. Finally, it said that credit card companies and debt collectors are relying more on text messaging and email to contact borrowers about past-due balances.