American credit card debt climbs to record $1.33 trillion

The total debt Americans owe on their credit cards has just hit an eye-watering $1.33 trillion, a new record high that shows how deep household borrowing has gone in ￰0￱ data, which came from CardRatings. com, reflects how average families are leaning on credit cards to cover everyday costs with the Federal Reserve’s rate cut doing nothing to ease the pain, and the numbers reveal that relief is still far out of reach for ￰1￱ half of ￰2￱ now carry credit card debt, paying over 20% interest on average, as it becomes one of the most expensive ways to borrow, for financing survival. “For millions of American households, credit card debt represents their highest-cost debt by a wide margin,” said Ted Rossman, senior industry analyst at Bankrate, describing how widespread and costly revolving balances have ￰3￱ rate cuts bring almost no real help Most credit cards have variable interest rates , which means their rates usually follow the Fed’s ￰4￱ the Fed lowers its rates, the prime rate drops too, and that should bring down interest rates on credit cards within a billing cycle or ￰5￱ that isn’t ￰6￱ the Fed cut rates by a full point in late 2024, the average credit card rate only slipped by 0.23% during that same ￰7￱ when the central bank trimmed another quarter point last month, the average rate fell by just 0.09%, landing at 24.22% for the third quarter.

“Consumers hoping for an automatic, proportional drop in their credit card interest rates may be disappointed,” said Jennifer Doss, executive editor at ￰8￱ explained that the link between Fed policy and card APRs is often weaker than people assume, adding that “credit card rates are heavily influenced by credit conditions and individual credit scores.” Jeff Sigmund, spokesman for the American Bankers Association, said the industry sets rates in “a highly competitive market.” He added that if the Fed keeps cutting rates, some consumers will see lower APRs eventually, though how much and how soon depends on the type of card and the ￰9￱ protect themselves, not borrowers Issuers, meanwhile, are finding ways to keep profits ￰10￱ said that card companies often trim the lower end of their APR range, which affects borrowers with excellent credit, but keep the higher end untouched.

Basically, the best customers get small cuts while those struggling with debt stay trapped in high-cost balances, according to ￰11￱ some retail credit cards, APRs are even rising, despite the Fed’s moves, according to a Bankrate ￰12￱ that issue store-branded credit cards have said maintaining higher APRs was necessary following a Consumer Financial Protection Bureau rule limiting what the industry can charge in late ￰13￱ after bank trade groups succeeded in overturning that rule earlier this year, major issuers like Synchrony and Bread Financial said they wouldn’t roll back those ￰14￱ is what that means for the average American: even if your card rate dropped by a quarter point, say, from 20.12% to 19.87%, you’d save about $1 a month if you’re only making minimum ￰15￱ only people escaping the pain are those who pay off their balances every month or take advantage of 0% balance transfer cards that offer 12 to 21 months interest-free.

“The real consumer benefit lies in making your personal credit card rate 0%, either by paying in full – if you can – or signing up for a 0% balance transfer card,” Rossman ￰16￱ your strategy with mentorship + daily ideas - 30 days free access to our trading program