Carrying a credit card balance may seem like a manageable short-term solution, but the long-term consequences can drain your finances and peace of mind. By examining the real costs—beyond just the balance owed—we can arm ourselves with practical strategies to regain control and build lasting resilience.
U.S. credit card balances are projected to hit $1.18 trillion by end-2026, marking a 2.3% year-over-year rise from $1.16 trillion in 2025. While this pace is the smallest annual increase since 2013 (excluding the COVID dip in 2020), it still represents $463 billion added since early 2021.
Jason Laky of TransUnion notes that this trend underscores “the relative strength and resilience of consumer credit behavior—even amid broader economic uncertainty.” Yet modest growth does not erase the hidden fees, interest costs, and psychological pressure that come with lingering debt.
Average credit card APRs sit near historic highs of around 21%, climbing above 22% for those already carrying balances. Although rates eased slightly from a mid-2024 peak of 22%, they remain nearly double what consumers paid a decade ago.
Howard Dvorkin, chairman of Debt.com, warns that “credit card APRs are typically tied to the prime rate... adjust upward fast and come down slowly.” These mechanics mean borrowers often pay far more interest than they anticipate.
Consider this example:
With an $11,400 balance at 23% APR, making only the minimum payment could cost a consumer roughly $18,500 in interest alone over 22 years. Compounding interest traps many in a cycle of debt that is difficult to break.
Delinquencies 90 days past due have climbed from 1.53% in late 2021 to about 2.57% in 2026—a steep rise reflecting tightening household budgets. Other credit categories are under strain as well: auto loans at 1.54%, mortgages at 1.65%, and personal loans approaching 3.75%.
Underlying this pressure are broader forces: inflation is running around 2.45%, and unemployment is forecast to rise to 4.5% by late 2026. As essentials cost more, consumers who revolve balances face a double bind of shrinking income and rising borrowing costs.
Every swipe, dip, or tap comes with a hidden cost. Merchants pay interchange fees that are often passed on to consumers in the form of higher prices or surcharges. Rewards cardholders subsidize perks through these fees—ultimately paying for points with steeper costs across the board.
Regulatory proposals such as the Credit Card Competition Act could cut interchange fees, but studies show that issuers respond by cutting rewards and raising fees elsewhere. Abroad, similar caps led to 50%+ fee hikes on cardholders. Back home, 98.8% of merchants raised prices after a hypothetical cap, illustrating the ripple effects of policy changes.
Nearly half of those juggling revolving debt report cutting back on spending, and more than a third seek new income sources to stay afloat. Buy Now, Pay Later (BNPL) schemes have attracted 26% of revolving debt holders, but they often hide an even greater risk: neglecting to treat deferred payments as debt.
Rathner of NerdWallet cautions that missing BNPL installments can ding your credit score just like a card payment. Awareness of true obligations is key to avoiding unexpected penalties.
While protecting consumers from exorbitant fees is laudable, blanket rate caps can backfire. A 10% APR limit, for instance, might shut millions out of credit—particularly those with lower scores who already rely on higher-rate products.
Citadel Credit Union’s Michael Desimone emphasizes that today’s rates reflect the Fed’s prime-linked adjustments. If regulation limits earnings for issuers, they may tighten underwriting standards or eliminate no-fee checking to preserve margins.
Getting free of credit card debt requires both mindset shifts and concrete actions. The journey may feel daunting, but every step forward builds momentum and peace of mind.
Adopting a disciplined payment strategy can cut years off your repayment timeline and save thousands in interest.
The true cost of carrying a balance extends far beyond the numbers on your monthly statement. Between compounding interest, hidden fees, economic uncertainties, and policy shifts, maintaining revolving debt can erode both your wallet and your confidence.
Yet informed choices—sticking to cash when possible, leveraging lower-cost credit, and committing to accelerated payoff plans—offer a clear path out. By shining a light on these hidden costs and embracing practical strategies, you can reclaim control of your finances and build a more secure future.
References
