Americans paid nearly 50% more in credit card expenses last year compared to the year before President Joe Biden took office — adding fuel to cries by Republican over the cost of living crisis facing voters ahead of November’s election.
In 2023, US credit card holders shelled out $157 billion in interest and fees on their credit cards – an increase of $51 billion compared to 2020, according to information provided by banks to the Federal Deposit Insurance Corp., which was first reported by Financial Times.
Meanwhile, credit card delinquencies are the highest in 13 years, according to Moody’s Analytics, as inflation-battered shoppers have charged up a record $1.13 trillion as of the final quarter of 2023.
Banks, however, have reaped have record profits from credit card lending as the Federal Reserve raised interest rates to a 23-year high. On Wednesday, the central bankers kept the rate unchanged.
The crushing debt has cast a pall over so-called Bidenomics, with a recent survey showing that half of Americans believe they were better off when Donald Trump was president.
A majority of those polled also said the economic performance under Trump — who is expected to battle Biden in a rematch for the White House — was far higher than his Democratic successor’s.
FT and Michigan Ross conducted a poll earlier this month which found that 28% of Americans said credit card debt was one of their biggest sources of financial stress.
In that same poll, a whopping 80% cited inflation as their chief concern.
Since Biden took office in January 2021, cumulative inflation stood at 18.5%.
The Post has sought comment from the White House.
The Biden administration announced a rule earlier this month to cap all credit card late fees, the latest effort in the White House push to end what it has called junk fees and a move that regulators say will save Americans up to $10 billion a year.
The Consumer Financial Protection Bureau’s new regulations will set a ceiling of $8 for most credit card late fees or require banks to show why they should charge more than $8 for such a fee.
The rule would bring the average credit card late fee down from $32. The bureau estimates banks bring in roughly $14 billion in credit card late fees a year.
The CFPB said last month that credit card companies’ interest on loans was at an all-time high, costing customers about $25 billion extra each year.
The agency said the annual percentage rate (APR) margin for revolving accounts – a type of credit account that lets customers borrow up to their maximum credit limit – is now at 14.3%, the highest in recent history.
The credit card market, a highly-concentrated industry, has attracted scrutiny from regulators and lawmakers for years.
Concerns about competition were renewed this week after Capital One agreed to buy Discover for $35.3 billion, with analysts predicting tough antitrust scrutiny for the proposed merger.
This has boosted the profitability of credit card companies.
Last week, the watchdog said that large credit card companies that dominate the market charge higher interest rates than smaller banks and credit unions.
With Post Wires
Credit: Source link
