The cost of carrying credit card debt has reached unprecedented levels. According to the Consumer Financial Protection Bureau's latest biennial report on the credit card market, Americans paid a record $160 billion in interest charges in 2024—up a staggering 52 percent from $105 billion in 2022. The jump reflects higher interest rates, growing balances, and more cardholders revolving debt month to month.

For American households already stretched by inflation and elevated costs for housing, healthcare, and childcare, the surge in credit card interest represents another significant drain on budgets. Understanding what's driving these costs—and how to minimize them—is essential for anyone carrying plastic.

What's Driving the Surge

The $55 billion increase in annual interest charges stems from three converging factors:

Record-High Interest Rates

The average annual percentage rate (APR) on credit cards reached 25.2 percent in 2024 for general-purpose cards—the highest level since the CFPB began tracking in 2015. Private-label store cards are even worse, averaging 31.3 percent. These rates reflect not only the Federal Reserve's rate hikes but also issuers' ongoing risk-based pricing strategies.

Even after the Fed began cutting rates in late 2025, credit card APRs have remained stubbornly elevated. Card issuers have shown little enthusiasm for passing rate relief through to consumers.

Higher Balances

Total credit card debt exceeded $1.2 trillion in 2024, with the average monthly balance per cardholder climbing to approximately $5,300. More debt at higher rates equals dramatically higher interest costs.

More Revolvers

The share of cardholders who don't pay their balance in full each month—known as "revolvers"—has stabilized at approximately 50 percent, returning to pre-pandemic levels. Among subprime cardholders, the revolver rate exceeds 85 percent.

"The combination of record-high rates and record-high balances has created a compounding problem for American consumers. Many people are paying hundreds of dollars monthly just to service debt, making it nearly impossible to pay down principal."

— Chi Chi Wu, Senior Attorney at the National Consumer Law Center

Who's Paying the Most

The interest burden falls disproportionately on certain groups. According to the CFPB report:

  • Income divide: Lower-income households are far more likely to revolve balances and pay interest. Among households earning under $50,000, over 70 percent of cardholders carry balances month to month.
  • Credit score stratification: Cardholders with credit scores below 660 are almost four times more likely to revolve (72-88 percent) than those with superprime scores (approximately 20 percent).
  • Age patterns: Younger cardholders tend to carry higher balances relative to income, while older Americans are more likely to pay in full each month.

This distribution raises equity concerns. Those who can least afford to pay interest—lower-income consumers with subprime credit—are the ones paying the most. Meanwhile, affluent cardholders who pay in full enjoy rewards programs and benefits subsidized in part by interest from revolvers.

The Minimum Payment Trap

One of the report's most concerning findings involves minimum payments. The share of cardholders making only the minimum required payment rose to 15 percent for general-purpose cards and 20 percent for private-label cards.

Minimum payments are designed to be affordable—typically 1-3 percent of the balance plus interest. But this affordability creates a dangerous trap. At minimum payments, a $5,000 balance at 25 percent APR would take over 25 years to pay off and cost more than $8,000 in interest—nearly double the original balance.

The math is brutal: if you make only minimum payments on a typical credit card balance, you'll pay more in interest than the original purchases cost.

What Can Consumers Do

If you're carrying credit card debt, several strategies can help minimize interest costs:

Balance Transfer Cards

Many cards still offer 0% introductory APR on balance transfers for 12-21 months. Transferring high-interest debt to such a card and aggressively paying it down during the promotional period can save thousands in interest. Watch for balance transfer fees, typically 3-5 percent of the transferred amount.

Personal Loans

For larger balances, a personal loan at 10-14 percent APR may be preferable to revolving credit card debt at 25 percent. The fixed payment schedule also ensures the debt gets paid down on a defined timeline.

Negotiating Rates

Many cardholders don't realize they can request lower rates. Call your issuer and ask—success rates for rate reduction requests run 20-30 percent for customers with good payment histories. Even a few percentage points can make meaningful differences on large balances.

Prioritizing Payoff

The math is clear: no safe investment reliably returns 25 percent annually. Paying down high-interest debt should generally take priority over investing beyond employer 401(k) matches.

Policy Implications

The report's findings have already sparked policy discussions. President Trump's recent call for a 10 percent cap on credit card interest rates—echoing a bipartisan proposal from Senators Josh Hawley and Bernie Sanders—directly addresses the pain point the CFPB has documented.

However, industry groups argue that rate caps would reduce credit availability, particularly for subprime borrowers. The Bank Policy Institute has estimated that more than 14 million households could lose access to credit cards under a 10 percent cap.

The CFPB report doesn't take a position on rate caps but does note that "high interest charges create substantial financial burden for consumers who carry balances, particularly those with lower incomes and credit scores."

Looking Ahead

With interest rates likely to remain elevated through much of 2026—the Fed has signaled only one or two additional cuts this year—credit card interest costs are unlikely to decline meaningfully in the near term. The burden will continue falling most heavily on those least able to bear it.

For individuals, the message is clear: minimizing credit card debt should be a top financial priority. Every dollar paid in interest is a dollar unavailable for savings, investing, or spending on things that actually improve your life. In a world of 25 percent APRs, the best investment most Americans can make is simply paying off their credit cards.