In 2022 alone, the Consumer Financial Protection Bureau (CFPB) reported that credit card companies charge consumers over $105 billion in interest. In February 2024, CFPB reported that rising interest rates were costing consumers an extra $25 billion annually.
The average Annual Percentage Rate now sits above 20%, almost ten times what banks pay on savings accounts. And they’re counting on you carrying a balance. More than half of all cardholders do, turning this into a never-ending cash machine for issuers.
Miss a payment? Brace yourself. Penalty Annual Percentage Rates can shoot up to nearly 30%, making it even harder to pay off your debt. It’s a system designed to keep you trapped unless you know how to beat them at their own game.
The strategy is brilliant from their perspective. They extend enough credit to keep you spending but not enough to let you easily pay it off. They set minimum payments low enough to be manageable but high enough to keep you paying for years.
A $3,000 balance at 22% APR with minimum payments will take over 19 years to pay off. During that time, you’ll pay more in interest than the original purchase amount.
