Americans paid nearly 50% more on credit cards last year than the year before President Joe Biden took office, fueling Republican cries over the cost-of-living crisis facing voters ahead of the November election. is.
U.S. credit card holders paid $157 billion in credit card interest and fees in 2023, according to information provided by banks to the Federal Deposit Insurance Corporation. This is an increase of $51 billion compared to 2020. The Financial Times reported.
Meanwhile, inflation-stricken shoppers have claimed a record $1.13 trillion in the final quarter of 2023, and credit card delinquencies are at a 13-year high, according to Moody’s Analytics.
But with the Federal Reserve raising interest rates to a 23-year high, banks are making record profits from credit card lending. On Wednesday, central bank authorities kept interest rates unchanged.
The overwhelming debt overshadows so-called Bidennomics, with recent polls showing half of Americans believe they were better off when Donald Trump was president.
A majority of those surveyed also said the economic performance under President Trump, who is expected to face Biden again in the race for the White House, was far better than that of his Democratic successor.
A poll conducted by the FT and Michigan Ross earlier this month found that 28% of Americans say credit card debt is one of the biggest causes of financial stress.
In the same poll, a whopping 80% cited inflation as their main concern.
Since Biden took office in January 2021, the cumulative inflation rate has been 18.5%.
The newspaper has contacted the White House for comment.
The Biden administration announced a rule earlier this month that would cap all credit card late fees, the latest effort by the White House to eliminate fees known as junk fees, which regulators say will allow Americans to It says it could save up to $10 billion a year.
New regulations from the Consumer Financial Protection Bureau would cap most credit card late fees at $8 or require banks to show why they charge more than $8.
The rule would reduce the average late payment fee for credit cards from $32. The bureau estimates that banks bring in about $14 billion annually in credit card late fees.
The CFPB said last month that credit card companies’ loan interest rates are at record highs, costing customers about $25 billion a year in additional costs.
The annual percentage rate (APR) margin on revolving accounts (a type of credit account that allows customers to borrow up to their maximum credit limit) is currently 14.3%, the highest in recent history, according to the agency.
The credit card market is a highly concentrated industry that has been under intense 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 the proposed merger would come under intense antitrust scrutiny. Expect.
This has increased the profitability of credit card companies.
The watchdog group said last week that the large credit card companies that dominate the market charge higher interest rates than smaller banks and credit unions.
with post wire
