$120 Billion a Year in Interest and Fees

A Story of America’s Credit Card Problem

Andy Spears


Photo by Kaysha on Unsplash

The Consumer Financial Protection Bureau (CFPB) has issued a report noting that Americans spend $120 billion per year on credit card interest and fees.

In a blog post highlighting key findings, the bureau notes:

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

While the pandemic caused many consumers to cut back on spending, the CFPB reports that consumer spending (and debt) is on the rise again. Due in part to consolidation in the credit card market, credit card interest rates are relatively high compared to other types of debt.

As the bureau notes:

“…from 2015 to 2019, the average assessed interest rate on credit cards increased by more than 20% (from 13.7% to 16.9%).

Proposed Action

As a result of the significant role that credit card debt plays in the American economy, the CFPB has indicated it will be examining ways to take action to protect consumers. Specifically, the CFPB notes it will work to:

Uncover unfair, anticompetitive practices. When an industry has a small number of major players, it can be common to see parallel, anticompetitive shifts in business practices. For example, in 2020, the CFPB uncovered that, over the course of 2014, major players in the credit card industry started withholding information that they previously reported to the credit bureaus about borrower repayment patterns and still do to this day.

Make it simpler to compare, switch, or refinance your credit card. Americans who want to shop for the lowest rate credit card don’t always have great ways to do so. Many credit card products advertise broad interest rate ranges. To get a specific rate, consumers often must apply for those cards, which results in a hard credit check, which perversely can lower a consumer’s credit score.

Scrutinize junk fees. While many of the worst practices that plagued the credit card industry were banned in the CARD Act of 2009, the industry is…



Andy Spears

Writer and policy advocate living in Nashville, TN —Public Policy Ph.D. — writes on education policy, consumer affairs, and more . . .