Why Americans Can’t Escape Credit Card Debt

Americans carry more than $1.2 trillion in credit card debt, and for many people, that’s no big deal. It’s everyday stuff: car repairs, medical bills, groceries. And if you only make the minimum payment, that debt can grow exponentially and linger for years.

The average credit card interest rate today is close to 20 percent, nearly doubling since 2010. So what’s driving these high rates?

Part of that is the broader economy. When the Federal Reserve raises rates to fight inflation, credit card APRs usually go up as well. But that is not the whole story.

Credit cards are unsecured loans, meaning there’s no house or car to repossess if you don’t pay. And Americans have become increasingly reliant on credit cards as wages stagnate and health care costs continue to rise.

Read more about how credit card interest rates affect everyone:

This video is hosted by Klarna. Klarna doesn’t have a say in our editorial decisions, but they make videos like this possible.