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Credit Card Users Paid Record $130 Billion in Fees and Interest in 2022, Predicts Rise in 2023

Increased Federal Reserve rate hikes and rising living costs have led to higher credit card charges, with late payment fees proving most significant; and one in ten credit card accounts are stuck in "persistent debt", fears rise for 2023.

Overview

  • Credit cardholders in America paid $130 billion in interest and fees in 2022, the largest amount recorded by the Consumer Financial Protection Bureau (CFPB) to date.
  • The Federal Reserve's multiple rate hikes in 2023 has led to this increase and there might be another rate hike before the end of the year.
  • Late payment charges are a significant drain on consumers, accounting for approximately $14.5 billion in fees for 2022, reverting to pre-pandemic figures.
  • About 10% of all general purpose credit card accounts in the U.S. were categorized as 'persistent debt', where interest and fees exceeded the principal payment, a rise from 8.4% in 2021.
  • Experts anticipate that the number of cardholders in persistent debt will increase in 2023 due to factors like rising living costs and shrinking paychecks, posing continuous challenges for credit card users.