More Americans Swiping Away On Credit Cards — But Many Unaware Of Rates They're Paying

More U.S. consumers are reportedly depending on their credit cards each month while many are doing so without being aware of the interest rates they’re paying.

According to data collected by Bankrate LLC in December, close to 46% of cardholders don’t pay off credit cards in full each month, reported Bloomberg. This is higher than the 39% recorded last year, the report said. Close to 43% of cardholders with debt aren’t aware of the rates linked with their cards, the data show.

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As interest rates are anticipated to reach a four-decade high in 2023 with the Federal Reserve’s fight against inflation, consumers are finding it hard to manage payments that have become more costly in recent years.

Interestingly, Federal Reserve officials have reportedly said fresh inflation data scheduled to be released on Thursday will help them decide whether the pace of interest rate hikes could be slowed, at the upcoming FOMC meeting.

Expert Take: Michaela Pagel, a Columbia Business School professor, wrote to Bloomberg in an email that it is more expensive to buy goods and services that households need. “These increased costs of living might be reflected in credit card balances and households may have trouble meeting their obligations if their wages stayed constant,” he said.

“People may not be fully aware of how expensive credit card debt — or other alternative loans — are, and that interest on these loans compounds,” Pagel said adding that “If somebody rolls over $5,000 of credit card debt over 5 years, it balloons into $12,441 at 20% interest.”

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