The numbers are sobering: Americans collectively paid $160 billion in credit card interest charges in 2024, according to a new report from the Consumer Financial Protection Bureau released late last month. With credit card debt now exceeding $1.2 trillion and average interest rates hovering near historic highs, the data paints a troubling picture of household financial stress.

The CFPB's biennial Consumer Credit Card Market Report, which analyzes data through the end of 2024, reveals that approximately 195 million Americans held credit cards—and many of them are struggling under the weight of persistent balances and punishing rates.

Interest Rates Near Historic Highs

The average credit card interest rate has climbed to between 19.65% and 21.5%, depending on the data source, marking one of the highest levels since federal regulators began tracking rates in the mid-1990s. A decade ago, the average rate was roughly 12%.

The surge reflects years of Federal Reserve rate increases, but the CFPB has noted that credit card rates have risen "far above the cost of offering credit"—suggesting that issuers have used the rate-hiking cycle to expand their profit margins.

"Credit card interest rates have soared far above the cost of offering credit. American families are paying the price."

— Consumer Financial Protection Bureau

Who's Being Hit Hardest

The burden falls disproportionately on lower-income households. According to the report, Americans earning $50,000 or less are increasingly using credit cards to fund daily necessities—not discretionary purchases, but groceries, utilities, and basic expenses.

This pattern correlates with the CFPB's finding that rising interest rates and record-high balances are placing disproportionate pressure on lower-score borrowers, creating a feedback loop where those least able to afford high-interest debt find themselves trapped in it.

The Collection Connection

Credit card debt now accounts for 32% of all accounts in third-party collections, highlighting how quickly manageable balances can spiral into serious financial distress when cardholders fall behind.

Trump's Rate Cap Proposal

The credit card interest burden has drawn unusual bipartisan attention in Washington. President Trump recently proposed a one-year 10% cap on credit card interest rates—a position that finds support across the political spectrum, from progressive Democrats like Bernie Sanders and Alexandria Ocasio-Cortez to populist Republicans.

Banking industry representatives have pushed back sharply. Credit card issuers argue that rate caps would reduce access to credit for the very consumers they're intended to help, as banks would tighten lending standards rather than accept capped returns on riskier borrowers.

  • Supporters argue: Rate caps would provide immediate relief to millions of struggling households and force issuers to price credit more fairly.
  • Opponents counter: Caps could reduce credit availability, push lending to less-regulated channels, and fail to address underlying financial behaviors.

Strategies for Managing Credit Card Debt

While the policy debate continues, individuals facing high-interest credit card debt can take several steps to reduce their burden:

  • Balance Transfer Cards: Many issuers offer promotional 0% APR periods of 12-21 months on balance transfers. Moving high-rate debt to these cards can provide breathing room to pay down principal.
  • Debt Consolidation Loans: Personal loans typically carry lower rates than credit cards and offer fixed payment schedules, making budgeting easier.
  • Negotiation: Cardholders with good payment histories can sometimes negotiate lower rates directly with their issuers, particularly if they cite competitive offers.
  • The Avalanche Method: Focusing extra payments on the highest-rate debt first minimizes total interest paid over time.
  • The Snowball Method: Paying off smallest balances first builds psychological momentum, even if it's not mathematically optimal.

The Bigger Picture

The $160 billion annual interest bill represents money that could otherwise flow into savings accounts, retirement funds, or consumer spending that supports economic growth. Instead, it transfers wealth from households to financial institutions—a dynamic that has drawn increasing scrutiny from regulators and lawmakers.

For individual Americans, the message is clear: in an era of elevated interest rates, carrying credit card balances has become extraordinarily expensive. Every dollar of debt at 21% interest roughly doubles in just over three years if left unpaid.

Whether through policy intervention or personal financial discipline, addressing the credit card interest burden has become one of the most pressing household finance challenges of 2026.