More bad news emerged Thursday concerning President Joe Biden’s inflationary economy. According to the Consumer Financial Protection Bureau (CFPB), credit card interest rates are at an all-time high.
How high? U.S. consumers are now hit with an additional $25 billion in debt for using their cards to make ends meet. The impetus of course is the inflation under the Democratic White House and ensuing interest rate hikes by the Federal Reserve.
This meant the annual percentage rates (APR) on virtually every line of revolving credit shot skyward, costing users billions.
A record-high credit card interest rates cost consumers $25 billion in 2023, according to a report.
The average APR hit the highest level on record, surging more as credit card debt continues to hit an all-time high.https://t.co/d8oKXz6Isz pic.twitter.com/ypdVxezAzX
— The Hill (@thehill) February 22, 2024
Just how staggering is the interest rate burden on consumers in Biden’s inflationary economy? According to Forbes, the average interest rate on a credit card is currently 27.91%.
As recently as Nov. 2023, that average sat at 22.75%, according to the Federal Reserve.
That means that households across the country are burdened with much higher credit card payments at a time when inflation is forcing them to resort to using plastic just to get by.
The CFPB further reported that credit card companies increased their APR margins by an average of 4.3 percentage points over the past decade. This put yet more of a crunch on cardholders.
The profitability of these financial institutions continues to climb through other means. According to the CFPB, the APR margin for revolving accounts is now up to 14.3%.
This is the high water mark in recent years and signals the industry is reaping greater profits.
A sign of weakening competition is the surprising finding by the CFPB that larger credit card institutions are charging higher interest rates than their dwindling smaller competitors.
This is seemingly counterintuitive, as the larger companies should have the ability to charge lower interest rates through sheer volume. Instead, they are reaping more profits by placing higher rates on their products than institutions with a much smaller base.
There is increased scrutiny over what has become a very consolidated industry. That trend continued recently when Capital One Financial entered an agreement to purchase Discover Financial for $35.3 billion.
Critics believe this transaction will get a close look from antitrust regulators.
