CFPB report reveals high credit card costs, growing debt, digital shift in 2022

Federal Issues Credit Cards Consumer Finance Fees Interest

On October 25, the CFPB released its biennial report on the credit card market pursuant to the Credit Card Act. The report found that credit card companies charged consumers more than $105 billion in interest and $25 billion in fees, with the bulk of the fees being late fees. According to the 175-page report, consumers are rolling balances month to month, and more consumers are falling into debt over time, while credit card companies’ profit margins remain high. The CFPB highlighted additional trends, including how: (i) the profits of major credit card companies have increased, surpassing pre-pandemic levels, which the CFPB suggests could indicate a lack of competition in the industry; (ii) annual Percentage Rates (APRs) for credit cards continue to rise; (iii) many cardholders with subprime credit scores paid a significant percentage of their average balance in interest and fees; (iv) late fees charged to cardholders have risen to pre-pandemic levels, and more consumers are delinquent; (v) credit card debt reached a record $1 trillion by the end of 2022, and annual spending on credit cards increased, returning to pre-pandemic levels; (vi) consumers who roll debt from month to month are paying a significant portion of interest and fees but earning only a small percentage of rewards. The report also notes a rise in digital communication—around 80 percent of cardholders, especially those under 65, use mobile apps for card management, which exhibits a shift in how consumers and financial institutions interact in the credit card industry.