Beat 20% Interest: Smart Moves to Crush Credit Card Debt
Credit card debt in the U.S. has surged - now around $1.2 trillion - while average APRs hover near 20%. In this interview with Bankrate's Ted Rossman we break down what's driving higher balances and rates, who benefits from rewards, why minimum payments barely dent balances, and practical steps to escape the cycle: pay in full when possible, prioritize debt payoff, consider 0% balance transfers or personal-loan consolidation, contact nonprofit credit counselors, and trim short-term expenses or boost income to accelerate repayment. Clear, actionable advice for anyone worried about mounting credit card bills.
Jeffrey Snyder, Broadcast Retirement Network
Joining me now is Ted Rossman of Bankrate. Ted, always great to see you.
Thanks for coming on the program again this morning.
Ted Rossman
Good to be here, thank you.
Jeffrey Snyder, Broadcast Retirement Network
So a lot going on. We have talked to you about a myriad of things over the last several months. We'd like to have you on, I'd like to have you on as frequently as I can get you.
Affordability continues to be a challenge in the United States of America for so many of us. And this, Ted, I think translates to credit card usage and credit card debt. What's your opinion on that?
Ted Rossman
These definitely go hand in hand because we're seeing more spending, we're seeing record amounts of credit card debt, about $1.2 trillion in total, according to the New York Fed. That's up about 60% over the past five years. So that really says a lot about inflation, consumer spending, a high cost of living.
Also, to be fair, more card usage and less cash. There is kind of a secular tailwind here that digital payments are growing, the population has been growing. So it's not all bad.
These figures don't distinguish between what's paid in full and what's not. And that's the big fork in the road because we know the economy is supported by consumer spending. We just don't want you to be saddled with credit card debt at a 20 or more percent interest rate.
So if you're in the half of cardholders who pay in full, that's great. You're getting rewards, you're getting buyer protections, you're getting convenience. When we talk about debt, we're really talking about the other half, the half who have an average debt load of about $6,500, according to TransUnion.
Credit card debt can be a persistent problem just because the interest rates are so much higher than other forms of debt.
Jeffrey Snyder, Broadcast Retirement Network
Let me, you brought up credit card rewards. If I may ask you about this, that has been a stimulus for more credit card applications and more people, and I guess for spending, do the companies, just independently, do the companies live up to these credit card rewards? Like my understanding, and I want you to correct me here, is that some of the companies have actually cut back on their rewards or limited the amount of time you have.
They actually expire. So is that really a good reason to get a credit card?
Ted Rossman
You're more likely to have airline miles or hotel points expire than you are credit card rewards in terms of like cash back or even the transferable travel points and miles. Usually those credit card rewards stay active as long as you're in good standing with the card company. A lot of this comes back to that K-shaped economy idea.
The rich get richer, the poor get poorer, the gap is growing. And some people are very critical of credit card rewards. And they say that it's kind of a reverse Robin Hood.
It's taking from the poor and giving to the rich. Others say that credit card rewards are a great benefit and not just for the rich but for people throughout the economic spectrum because you could have a high income but also have a lot of debt and be living beyond your means versus you might have a lower income but if you pay your bills in full, rewards are free money. It does come back to the individual.
It's like that saying about credit cards are like power tools. They're either really useful or dangerous. It's all about how you use them.
Credit card rewards have been meaningful for my family. We earned about $3,000 in cash back last year. My advice would be lean into your everyday spending categories.
Maybe it's gas or groceries or dining out or travel. Wherever you spend a lot of money, optimize those credit card rewards. Just make sure to pay in full because that's the only way these are worth it.
If you have credit card debt, knock out the debt first before pursuing rewards.
Jeffrey Snyder, Broadcast Retirement Network
Let's talk about interest rates, Ted. I know this is something that Bankrate really focuses on. I think the Fed recently said they were gonna keep interest rates the same.
So the Fed fund lending rate the same. How does that translate down or up to credit cards? And we're still seeing double digit credit card APRs when I look at applications, not that I'm applying, but there's still double digits in the high double digits.
Ted Rossman
That's right. The average credit card rate is around 20% and it's only come down a little bit. It's come down about a point and a half from its all time record set a couple of years ago.
Honestly, you hardly notice if your credit card rate is 21% or 19 and a half. I mean, those are both very high rates and credit card rates do mirror the Fed. The issuers add a profit margin on top of that.
Well, it's not all profit. Some of it goes to overhead and if people don't pay them back and that sort of thing, although it is a very profitable business. We typically see the credit card formula as something like the prime rate plus 13% or something like that.
That's kind of how we get it today's average around 19 and a half. These are very high rates. If you have a lesser credit score, you could easily be paying 25, 30, even up to about 36%.
That's about as high as we see. Store cards charge very high interest rates. You just have to be really careful here because back to that power tool analogy, cards can work for you or against you.
If you're in the half with credit card debt, get a 0% balance transfer card. Work with a reputable nonprofit credit counselor. Maybe think about cutting some expenses or doing what you need to do to pay this off.
Maybe you take out a personal loan as a form of debt consolidation. That can lower your rate. Credit card rates are three, four, five times higher than we see on the typical auto loan, student loan, mortgage.
It's just really important to prioritize this payback.
Jeffrey Snyder, Broadcast Retirement Network
Is the rationale as to why it's so high? It's unsecured debt, meaning there's nothing, you don't put up collateral, meaning the individual doesn't put up collateral. So that necessitates a higher rate because there's more risk.
There's been a lot of conversation about capping these rates, but wouldn't that, if they cap the rates, they would deprive maybe people in the lower income strata the opportunity to borrow using a credit card.
Ted Rossman
All good points, yes. Credit card rates are higher than things like mortgages and auto loans because credit card debt is unsecured debt. It's not backed by your home or your car.
Yeah, you could be sued for nonpayment or they could ding your credit, but it's not quite the same as taking the car back if you miss a couple of payments. Lenders price for risk. Right now, actually, credit card delinquencies are about as high as they were during the Great Recession.
So that's kind of alarming. That is indicative that many, especially those with lower incomes and lower credit scores, have fallen behind. A lot of times, it's not their fault, I would say.
I mean, it's the cumulative weight of inflation or it's a medical bill, it's a car repair. It's usually practical stuff. It's not frivolous vacations and shopping sprees, but it's really important to attack this debt.
So right now, we see about 12% of credit card balances are delinquent, according to the New York Fed. So that's a big part of why they price in the higher risk here. If you are in trouble, speak up.
Ask your lender for a break. Ask for a hardship program. Ask Money Management International or Greenpath or some other reputable nonprofit credit counselor if they can help you.
Don't just hide from it because then the problem grows and you get more credit score damage, you get late fees. It's harder the longer you wait.
Jeffrey Snyder, Broadcast Retirement Network
And to that point, paying the minimum, it's not really gonna make a dent in your balance. I mean, say it's like 25 a month. I mean, that really probably goes more towards interest than it does for principal.
Am I correct on that?
Ted Rossman
Yes, the typical credit card minimum payment is 1% of the balance plus interest every month. So you're really not making much headway. If you make minimum payments towards the average balance, which is around $6,500, according to TransUnion, minimum payments at 20%, that keeps you in debt for 18 years and you end up paying more than $9,000 in interest.
So you're really not making much progress. That's why you need to make this a priority. Getting that 0% balance transfer card or working out one of those debt management plans with a reputable nonprofit credit counselor.
Even looking for ways to up your income. Maybe you take on a side hustle for six months and you put that money towards your credit card debt or you cut your expenses. Maybe you take a close look at how much you're spending on streaming services, dining out, things like that.
I'm not saying you need to change these things forever, but if you buckle down for six months, you can make meaningful progress. And that can free up a lot of money for other things.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, you know, I really hate, sorry, that's my mom calling, hi mom. I really hate when people on the outside say, you shouldn't buy that latte from Starbucks or you shouldn't do this or that. I think people, I can just relate from my own personal experience, I think people are really struggling right now to pay for gas, pay for the key things and they're looking for ways to pay it.
So just saying cut back on the latte, yeah, the latte is 10 bucks. That's a lot of money. Maybe you should cut back on that just for dietary and health reasons.
But I don't think it's a personal thing, right? I mean, it really is all about you as an individual. I don't feel like I'm in a position to berate anybody else about their spending or nor is anybody else.
Ted Rossman
Well, it's important to note that the primary cause of credit card debt is some sort of emergency expense. It's a medical bill, it's a home repair, a car repair. These are necessities.
If you don't have savings, you put it on the credit card and then the debt cycle becomes really hard to break. The second most common reason is day-to-day expenses. Things like gas and groceries outpacing your paycheck.
So credit is a necessary line for people. It's a lifeline. And you mentioned earlier the efforts to cap credit card rates.
There's been proposals in Washington to cap at 10%. Well, that sounds great, but then banks were gonna cut back on access to credit. And it's not gonna be profitable to lend to most people.
So then if you don't have the credit card, then what are you gonna do if you're in a pinch? So credit cards are a little bit of a necessary evil, I would say, in terms of bridging the gap. Payday loan has a 400% APR.
So in an ideal world, everybody would have savings, nobody would have debt. It doesn't always work out that way. But what's really important is just to break that cycle.
If you have to rely on a credit card from time to time for these kinds of expenses, that's normal, but you don't want it to fester. You don't want those minimum payments to stick with you for 20 years. So that's where you just really need to prioritize some of these strategies.
My favorite is that balance transfer approach. You get a 0% deal for 21 months with a card like the Wells Fargo Reflect, that's a huge tailwind.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, it's a reprieve and it's a good, get you back on your feet to make the right choices in the future. Ted, we're gonna have to leave it there, but I guarantee you and I will continue to be talking about credit card balances because this is something that's gonna be, whether you're joining the workforce, whether you've been in the workforce, regardless of age, we're gonna be talking about this. Thanks for joining us.
We look forward to having you back again very soon.
Ted Rossman
Happy to help, me too, thank you.
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This story was originally published May 10, 2026 at 6:30 AM.