[co-author: Skylar Stoudt*]

On October 25, the CFPB released its sixth biennial report to Congress as required under the Credit Card Accountability Responsibility and Disclosure Act (CARD Act). The report found that in 2022 credit card companies charged consumers over $105 billion in interest and more than $25 billion in fees. The report also showed several trends in consumer credit card activity and identified potential areas of concern. Key highlights from the report include:

• Competition Concerns: The profits of major credit card companies have increased, surpassing pre-pandemic levels, which the CFPB suggests could indicate a lack of competition in the industry.
• APR Increases on Credit Cards: Annual Percentage Rates (APRs) for credit cards continue to rise. The average APR on private label and general-purpose cards rose to 27.7 and 22.7 percent, respectively, at the end of 2022, both increasing approximately two points since 2020.
• Subprime Cardholders’ Interest Burden: Cardholders with subprime scores pay two to four times more in interest and fees per dollar of credit extended than those with scores above 720.
• Late Fees and Delinquencies Rise: Late fees charged to cardholders have risen to pre-pandemic levels, and more consumers are delinquent. Quarterly late fees charged exceeded $4 billion for the first time in the fourth quarter of 2022.
• Record Credit Card Debt and Spending: Credit card debt reached a record $1 trillion by the end of 2022, and annual spending on credit cards increased, returning to pre-pandemic levels.
• Digital Usage Reshapes Credit Card Industry: Approximately 80 percent of cardholders, especially those under sixty-five, use mobile apps for card management, which shows a shift in how consumers and financial institutions interact in the credit card industry.

Putting It Into Practice: The CFPB is expected to utilize this data to strengthen its case for lowering the safe harbor amounts for credit card late fees in Regulation Z as it moves forward with the finalization of its rulemaking aimed at credit card late fees, which was initially proposed in March (read our previous blog post on this here). This report should also be considered in the context of the CFPB’s moves to improve consumer access to, and control over, their financial data (read our previous blog post on this here).

*Skylar Stoudt is a law clerk in the firm’s Washington, D.C. office.