Consumers are sitting on mountains of debt, and many people are facing record interest rates on credit card purchases they can’t afford to pay off each month.

Will all this be enough to spoil the fun of Christmas shopping? Probably not, but the advice to limit spending and control debt is stronger than ever.

According to, the typical credit card today has a record rate of 20.72% for introductory offers. Certain types of card, such as those sponsored by specific stores or retailers, show even higher rates, averaging 28.93%, according to a new survey by the company.

People who can’t pay off their balance in full each month face high interest charges and risk spending many months, even years, paying off their bills.
In fact, credit card debt reached a record $1.03 trillion in the second quarter of this year, according to the Federal Reserve Bank of New York. In 2022, consumers had to pay $105 billion in interest on their cards and racked up $25 billion in late fees and other charges, the Consumer Financial Protection Bureau recently reported.

Few signs yet of tapped-out consumers

However, defaults, bankruptcies and the other usual red flags aren’t sounding just yet, and retailers are gearing up for a reasonably robust end-of-year shopping season.
“Most people are up to date with their bill payments,” says Ted Rossman, senior industry analyst at

There are several factors behind this, but probably the most important is a still solid employment situation, with many vacancies and few redundancies. Many people still have a good financial reserve, whether as a result of property capital, pandemic emergency aid that has not yet been fully spent, or for other reasons.
Over the past year, total credit card debt has risen by 11%, despite rising rates, as people borrow to try to maintain the standard of living they enjoyed during the pandemic, noted David Kelly, chief global strategist at J.P. Morgan Asset Management.

“It’s worth noting, however, that this debt growth is probably far from having reached a tipping point,” he wrote in a recent commentary.
J.P. Morgan estimates that debt servicing or repayment management recently absorbed just 9.9% of household disposable income. This remains well below the peak of 13.2% reached some fifteen years ago.

Of course, not all credit card users face these 20%-plus interest rates, as around half of borrowers repay their credit balances every month, and long-standing accounts benefit from lower rates.

However, Bankrate’s latest survey shows that 47% of consumers are unable to pay off their credit cards each month, up from 39% in December 2021, around the time the Federal Reserve began raising interest rates. The jump in average credit card rates to 20.72% today from 16.16% two years ago is almost entirely attributable to Federal Reserve rate hikes aimed at curbing inflation, Rossman said.

Keeping credit balances manageable

What can consumers do to keep their credit card debts under control?

In addition to the usual precautions, such as sticking to a budget, paying cash and getting a side job, now may be a good time for those with persistent credit card debt to consider a 0% balance transfer. This allows consumers who switch credit cards to defer interest payments for up to 21 months. Two cards Rossman likes for this purpose are Wells Fargo Reflect and Citi Simplicity.

Consumers who choose the balance transfer route typically face fees of 3% to 5% of the transferred balance, but it can be a good deal because of the interest payment relief offered, he said. To benefit from a transfer, borrowers generally need a good credit score, around 670 or higher, and can usually transfer no more than $5,000 to $6,000 in debt, he added.

According to a recent WalletHub survey, card issuers with high consumer satisfaction scores include Navy Federal Credit Union, U.S. Bank, Discover, Amex and Chase. This survey revealed even higher interest rates on new cards than the Bankrate survey, with an average close to 22.4%.

Those looking for a new credit card can still find cards with interest rates below 20%. Rossman suggests looking for cards issued by several federally insured credit unions, which generally limit interest rates to a maximum of 18%.

Given these high interest rates, it doesn’t take long to fall behind if you’re unable to make high enough payments. If that’s the case, you may need to seek more concentrated help from non-profit credit counseling groups such as Money Management International and many others, Rossman suggests.

Card late fees could start easing

While cardholders don’t have much to get their teeth into when it comes to interest rates, there is good news regarding late fees, as the Consumer Financial Protection Bureau has proposed reducing them to $8 per violation, with a few exceptions.

First there were tips. Now it’s fees: how do Americans pay to use credit cards?

This rule could go into effect in early 2025, according to Consumer Reports, which recently estimated that 52 million Americans had paid late fees in the past 12 months.

However, credit card interest rates are unlikely to start falling until the Fed starts cutting rates, which doesn’t seem likely until at least the second half of 2024.

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