Retail credit cards users from four major brands may become bankrupt as key reason makes bills harder to pay off

RETAIL credit card users are more likely to become bankrupt it has been revealed after a key reason makes it harder to pay off debt.

A major change has led to retail credit cards having record high interest rates of a whopping 30.45 per cent.

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American’s with retail credit cards are facing a huge problem[/caption]

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Sky high interest rates are making it hard to pay off bills[/caption]

While store credit cards have always had higher interest rates recent but a recent change has caused the rates to skyrocket.

Retail credit cards tend to have higher rates because because people who have them usually have lower credit scores and are considered more risky by banks.

Banks raised interest rates in anticipation of the Consumer Financial Protection Bureau capping credit card late fees but this never ended up coming into effect.

The move left interest rates for retail credit cards at record high levels after card companies didn’t roll back higher rates after their victory in federal court.

Consumers are now struggling to pay off debt with substantial late fees and huge interest rates.

The number of people with retail credit card debt that file for bankruptcy has reportedly been rising at a faster rate since 2021.

Between 2023 and 2024 the number of cases that included retail credit card debt rose 12 per cent according to CNBC.

This was in comparison to the number of new cases which rose by only 5 per cent.

An industry trade group, the Consumer Bankers Association, told CNBC: “Retail credit cards play an important role in helping consumers manage everyday expenses and build credit.

“Consumers have thousands of options to shop for rates, take advantage of balance transfer offers, and access hardship assistance when needed.

“America’s leading retail banks remain focused on competitive card options that provide transparency and responsible lending, and that support customers through a wide range of financial tools to help them make ends meet.”

The Consumer Financial Protection Bureau was due to introduce the credit card late fee rule.

This would have capped the rate that banks could charge borrowers at just $8, down from $32 at the time.

Four major credit card companies, Bread Financial, Synchrony, Capital One and Citigroup announced that they would raise interest rates in response.

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Retail credit cards now have an average interest rate of 30.45 per cent[/caption]

The rate increases were due to average at about 10 per cent but in some cases were as high as 36 per cent.

The credit card late fee rule was never introduced however but the bumped up interest rates remained in place.

Now the number of people with retail credit debt filing for bankruptcy is rising faster than new filings overall.

Interest rates are now at a record high average of 30.45 per cent with retail credit card holders paying back massive amounts on borrowed cash.

Late fees and other additional fees now also apply as CNBC report some banks are charging for paper statements to be delivered.