Blog

The Credit Card Interest Rate Trap: Legal Usury?

Credit card interest rates are out of control, and consumers are feeling the squeeze. With the average credit card APR hovering around 20%–30%, some even exceeding 36%, it’s no wonder people are drowning in credit card debt. Add in monthly fees, late fees, and penalty APRs, and it’s starting to look less like a financial tool and more like legalized loan sharking. But how do credit card companies get away with it? And will the new administration step in to fix this mess?

The situation worsened in 2024, when the Federal Reserve rate hikes aimed at fighting inflation caused credit card interest rates to surge. These hikes didn’t just affect credit cards—they also impacted home equity lines of credit (HELOCs) and adjustable-rate mortgages (ARMs). Homeowners who once enjoyed low HELOC rates suddenly faced significant jumps in their monthly payments. Meanwhile, ARM mortgage rates skyrocketed, making homeownership even more expensive. The result? Higher debt burdens for consumers across the board, reinforcing the idea that the system favors banks and lenders over the average borrower.

Will the New Administration Crack Down on High Credit Card Rates?

There’s been talk about regulating credit card interest rates, but will anything actually happen? History tells us that when banks are in trouble, the government rushes in to help—but when consumers are drowning in debt? Not so much. No, they’d rather send $50 billion to Iran instead. Priorities, right?

A Look Back: The 2008 Bank Bailout

Remember 2008, when the economy collapsed under the weight of reckless banking practices, and the government decided that banks were simply “too big to fail”? Instead of letting them face the consequences of their greed, the U.S. government bailed them out with $700 billion in taxpayer money. Meanwhile, everyday Americans who lost their homes, savings, and jobs were told to figure it out on their own.

Now fast forward to today. Credit card companies are making record-breaking profits, charging outrageous interest rates, and nickel-and-diming consumers with fees. Will the government step in this time? Or will they turn a blind eye while banks continue cashing in?

Big Banks Spend Big Money—Not on You, But on Themselves

If you think banks are struggling, just take a look at how much they spend on advertising. Major credit card companies drop billions each year on marketing to convince you that their latest platinum, sapphire, diamond-encrusted card is the best thing since sliced bread. In 2023 alone, American Express, Chase, and Capital One each spent over $1 billion on advertising—EACH! You read that right. THREE BILLION DOLLARS. Just to make sure you sign up for their debt trap.

Let’s put that into perspective:

• That’s more than the annual budget for the Federal Trade Commission (FTC), the agency supposedly regulating these financial giants.
• More than the total amount spent on student loan forgiveness programs.
• More than some entire countries’ annual GDP.
• And a whole lot more than they’ll ever give back in cash-back rewards or so-called free flights (which, let’s be honest, are hardly free).

The Hidden Fees That Make It Worse

As if absurd credit card interest rates weren’t enough, many credit cards pile on extra fees:

• Monthly maintenance fees (even if you don’t use the card!)
• Late payment fees (which can trigger penalty APRs)
• Balance transfer fees (even when switching to a lower-rate card)
• Cash advance fees (with even higher interest rates)

And let’s talk about those cash back and rewards programs. The ones that sound like you’re “getting something back” while banks keep you paying hundreds or thousands in interest and fees.

For example, a premium credit card with 1-3% cash back might also come with a $695 annual fee. Let’s do the math: if you spend $5,000 a year at 1.5% cash back, you earn $75 in rewards—but you’re paying more than $600 just to keep the card open. Sound like a deal? Banks are counting on you not doing the math.

Will Anything Change?

1. Lowering the interest rate cap – Some lawmakers have proposed a 36% APR cap (which is still high) to prevent extreme rates.
2. Eliminating junk fees – The Biden administration has pushed for reducing hidden credit card fees, but enforcement has been weak. Will the new administration take action or let banks continue profiting?
3. Stronger consumer protections – Some groups want tighter regulations on how credit card companies increase rates, but banking lobbyists will fight against it.

Don’t Hold Your Breath

Big banks have deep pockets and plenty of political influence. They donate millions to political campaigns, fund think tanks, and hire an army of lobbyists to make sure things stay exactly as they are. But let’s not forget Congress itself is raking in the benefits. You really think they’re going to push for change? Fat chance. Why would they bite the hand that feeds them when they’re building their own personal wealth off lobbyist dollars? As long as the money keeps flowing into their coffers, expect plenty of talk, but no real action.

Unless consumers demand credit card reform, don’t expect real change. The credit card industry is a trillion-dollar machine, and politicians on both sides have been reluctant to challenge it.

The bottom line? Credit card interest rates are a financial trap, and the system is designed to keep it that way. Until the government intervenes, the best defense against high APRs is awareness and strategy.

Meanwhile, we’re seeing billions of taxpayer dollars being spent on questionable foreign aid, government pet projects, and outright waste. The government has been more than happy to forgive billions in student loan debt, so why not apply that same generosity to the average American struggling with high-interest credit card debt? Instead of sending millions overseas for projects like shrimp running on treadmills (yes, that was a real thing), how about using those funds to bail out the actual taxpayers for once?

What do you think—should there be a government cap on credit card interest rates? Should we redirect some of that wasteful government spending toward helping everyday Americans get out of crushing debt? Share your thoughts below!