Carrying a credit-card balance has gotten way more expensive

livemint.com:

Americans can’t remember a time when it cost as much to carry a credit-card balance.

Banks have been raising interest rates on credit cards for years, and some are lifting them higher still to recoup the revenue they fear losing from a new cap on late fees. That means cardholders struggling to pay their bills might not see much relief, if any, even with the Federal Reserve expected to continue lowering rates.

The average credit-card interest rate was 21.5% in May, hovering around its highest level in Fed data going back to 1994. The average balance that people carry was around $6,300 in the second quarter, up 31% from the same period in 2021, according to a TransUnion report.

The Consumer Financial Protection Bureau finalized an $8 cap on late fees earlier this year, saying banks exploit a loophole to get around a ban on excessive fees. Fees can be as much as $41 when a payment is even a couple of hours late, the agency said.

Banking and business groups sued to block the cap, and a Texas judge halted its implementation in May just before it was set to go into effect. The rule remains tied up in the court, but card issuers and banks have already been raising rates and charging new fees to offset any potential losses.

Republican presidential candidate Donald Trump proposed a temporary cap of 10% on rates last month, though his campaign didn’t provide any details on how he would achieve that.

A fresh look at card balances and delinquencies comes next week, when JPMorgan Chase and Wells Fargo kick off third-quarter bank earnings.

During an earnings call in April, Capital One Chief Executive Richard Fairbank said the late-fee cap would significantly affect his company’s financial performance. He said Capital One was already