Americans Paid an Estimated $25 Billion More in Credit Card Interest and Fees in 2022 Than in 2021

Written by  Maggie Davis

Edited by  Dan Shepard

+ 1 More

Published May 01, 2023 Content was accurate at the time of publication.

Many Americans are no strangers to the financial burden of credit card debt — and as interest rates climbed throughout 2022, that burden grew heavier. In fact, Americans paid an estimated $133.1 billion in credit card interest and fees to banks, credit unions and finance companies in 2022 — a 23.1% (or $25.0 billion) increase from 2021, according to the latest LendingTree study.

Here’s what else we found.

Americans paid an estimated $133.1 billion in credit card interest and fees in 2022

The cost associated with accumulating credit card debt is on the rise for Americans. In 2022, consumers paid an estimated $133.1 billion in credit card interest and fees to banks, credit unions and finance companies — a steep 23.1% (or $25.0 billion) increase from an estimated $108.1 billion in 2021, when owed credit card interest and fees were at their lowest dating to 2018.

Before 2022, credit card interest and fees declined for two consecutive years. The only other year in this period that saw an increase in credit card fees — 2019, when paid interest and fees rose by 6.3% — was also the year that credit card interest and fees were at their highest, with consumers paying $134.1 billion to financial institutions.

Total interest and fees paid on credit cards (by year)

Why did paid fees and interest spike so much in 2022? According to LendingTree chief consumer finance analyst Matt Schulz, Federal Reserve rate hikes are likely to blame here.

“When you combine the seven interest rate increases from the Fed in 2022 with rampant inflation, you’ll find that more people were forced to rely on their credit cards,” he says. “That made it harder for them to pay their bills in full each month, creating a massive jump in the amount of interest that credit cardholders paid. Unfortunately, that isn’t likely to change anytime soon. The Fed isn’t expected to lower rates until late this year at the earliest and perhaps not until next year. So it’s important for people to prioritize paying down their high-interest credit card debt as soon as possible.”

The Federal Reserve funds rate remained low from 2018 through 2021. The Fed’s target rate was 1.25% to 1.50% heading into 2018 before dropping to 0.00% to 0.25% in March 2020, where it stayed until March 2022. Seven rate hikes in 2022 put the target rate at 4.25% to 4.50% by the end of the year. Each time the target rate rises, credit card interest rates generally increase by the same rate.

Americans paid an estimated $39.0 billion in interest and fees in the fourth quarter of 2022

Although the amount consumers paid in credit card interest and fees rose dramatically in 2022, a quarterly look paints a clearer picture. In fact, Americans paid the most in interest and credit card fees in the fourth quarter, paying an estimated $39.0 billion to financial institutions — or $424.1 million a day. That’s an 11.8% increase from the previous quarter.

While Americans paid the highest amount in the fourth quarter, interest and credit card fees rose the highest percentage in the third quarter. During this quarter, Americans paid an estimated $34.9 billion in credit card interest and fees — a 15.0% increase from $30.3 billion in the second quarter.

Total interest and fees paid on credit cards (by quarter, 2022)

Let’s break that down even further. Per day, that’s an estimated $69.11 in interest and fees for each credit card account in the fourth quarter of 2022 — or $23.04 monthly. This was a 29.0% increase from the fourth quarter of 2021, when Americans paid $53.57, or $17.86 monthly.

Interest and fees paid per credit card account

Again, Schulz says, the Fed’s rate hikes likely play a role here — though holiday spending may have exacerbated the amount Americans paid financial institutions.

“Holiday spending and travel always make the fourth quarter a spendy time for Americans, and that was no different in 2022,” he says. “However, 2022 was unique in that the Fed raised rates three-quarters of a percentage point each in three of the four months leading up to the quarter. That led to a massive increase in the average APR on all credit cards, including those accruing interest.”

The average APR for credit card accounts assessed interest was 20.40% in the fourth quarter of 2022 — up 24.1% from a year earlier, when the average APR was 16.44%.

With such high interest rates, consumers may be more likely to fall behind on their payments. In fact, according to the Federal Reserve, the credit card delinquency rate in October 2022 was 2.25%, up from 1.57% in October 2021.

California residents paid an estimated $17.1 billion in interest and fees in 2022 — here’s how other states compare

California residents paid the most in credit card interest and fees in 2022 at an estimated $17.1 billion. That’s followed by Texas ($11.8 billion) and Florida ($10.6 billion) residents.

This boils down to population size, as the three states have the largest populations in the U.S.

States that paid the most in credit card interest and fees in 2022

On the other end of the list, Wyoming ranked last. Residents here paid just $215.5 million in credit card interest and fees. That’s followed by Vermont ($238.1 million) and North Dakota ($288.1 million) residents.

Each of these states has fewer than 800,000 residents. More specifically, Wyoming and Vermont have the lowest and second-lowest populations, respectively, while North Dakota has the fifth-lowest.

States that paid the least in credit card interest and fees in 2022

Full rankings: States that paid the most/least in credit card interest and fees in 2022

Reducing and avoiding credit card interest and fees: Top expert tips

Yes, interest rates are sky-high, even by credit card standards. However, Schulz says, the good news is that cardholders have options. Particularly, he recommends the following:

Methodology

Researchers analyzed data from the Federal Financial Institutions Examination Council (FFIEC) to determine how much Americans paid in credit card interest and fees to banks in 2022.

Using the G.19 consumer credit report from the Federal Reserve, researchers calculated the estimated interest and fees paid on credit cards not only to banks but also to credit unions and finance companies.

To determine interest paid at the state level, researchers used New York Fed Consumer Credit Panel/Equifax data on credit card debt balances per capita.