An average of $120 billion in credit card interest and fees are paid by Americans each year

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January 21, 2022

Credit cards and fees

Credit cards are the large lending product used by consumers, more than 175 million consumers have at least one credit card. The Consumer Financial Protection Bureau known as CFPB estimated that Americans paid $120 billion per year in credit card fees and interest. What give us $1,000 spent per every American household per year.

But being the most consolidated financial product for consumer, do not necessary indicates they are the best option financially. Credit card rates and interest usually are relatively expensive for consumers. Indeed, interest rate on credit cards increased by more than 20% (from 2015 to 2019).

This has brought CFPB to the mission to search for a fairer competition in the credit card market that can be reduced to 3 main topics:

Uncover anticompetitive practices. In an industry with a small number of major players, anticompetitive practices can be common. CFPB uncovered that over the course of 2014, the biggest players in credit card industry withhold information previously reported to credit bureaus about borrower repayment making it more difficult for other issuers to offer competitive pricing to customers.
Offer an easy way for consumer to compare fares and refinance your credit card. To get a specific rate from a credit card, consumers often must apply for those credit card. Multiple applications could be necessary to check rates and this can lead to a negative impact on consumer credit score, taking away consumer right to shop for the lowest rate. The CFPB is looking to give consumers more control of their financial data, escaping from high rates and lousy service and allowing them to create more options for themselves to find better deals.
Scrutinize junk fees. Many of the worst practices of the credit card industry were eliminated thanks to the CARD Act of 2009, but industry is still hugely dependable of fees. Given the millionaire amounts collected on fess for many transactions, competition may be ineffective when putting down prices. CFBP will consider ways that help consumers to reduce fees and give them a more affordable cost of credit.

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