Credit Cards: Helping Consumers Manage an Affordability Squeeze

Credit cards give consumers a flexible, secure, and regulated way to manage unexpected costs, build credit, and participate in the economy.

WASHINGTON, D.C. — As families continue to contend with higher everyday costs, the Consumer Bankers Association (CBA) today released a new fact sheet, "Credit Cards: Helping Consumers Manage an Affordability Squeeze," detailing the important role credit cards play in helping millions of Americans manage unexpected expenses, build credit, and participate in the economy. The two-page fact sheet also dispels common misconceptions about credit card debt and pricing while highlighting the risks that proposals such as government-imposed interest rate caps would pose to consumers who rely on access to regulated credit.

The resource brings together publicly available research showing that credit cards provide consumers with financial flexibility during periods of economic uncertainty, protect cardholders against fraud and unauthorized transactions, serve as a critical pathway to establishing a credit history, and help families bridge temporary financial gaps when unexpected expenses arise.

To view the CBA fact sheet, click HERE.

How Credit Cards Help

Bridge the Gap

 A car repair, medical bill, temporary cut in hours, or unexpectedly high household expense can strain even a carefully managed budget. Seventy-five percent of households experience at least one significant expense shock in a given year, with affected households facing a median expense shock of $5,000. Credit cards can bridge the gap when an expense arrives before the income to cover it, helping households spread unexpected costs across pay periods while keeping up with other essentials. 

Power the Economy

The scale of credit card activity is significant: card spending volume was equivalent to more than one-fifth of U.S. GDP in 2022, and credit-card purchase volume rose to $3.6 trillion in 2024, up from $3.2 trillion in 2022.

Protect Consumers

When a card number is stolen, banks investigate suspicious charges, reverse unauthorized transactions, and typically make consumers whole with zero liability to the cardholder. Depending on the product, cards may also provide charge reversals, protections for damaged rental cars, roadside assistance, and safeguards when a purchase is lost or breaks.

Build Credit

For millions of consumers, a credit card is the first step into the mainstream credit system. CFPB research found that credit cards are the most common entry product for consumers becoming "credit visible." A credit history can help consumers qualify for a car loan, rent an apartment, secure other forms of credit, and participate more fully in the economy.

What The Data Show

APR doesn't tell the full story of credit card costs

APR is a sticker price, not the full measure of consumer cost. The CFPB’s Total Cost of Credit metric measures the interest and fees consumers pay relative to their outstanding balances. While APRs have risen alongside the Prime Rate, consumers’ total cost of credit has remained largely flat over the past decade.

Balances remain stable

Aggregate debt figures obscure what is actually happening at the household level. There are roughly 39 million more cardholders than eight years ago, while inflation has increased the nominal cost of everyday purchases. Once adjusted for inflation and the growth in cardholders, average credit card balances have remained largely flat over the past decade.

Consumers continue to manage credit responsibly

Repayment behavior also shows resilience. In 2024, 43 percent of consumers paid balances in full, the highest level observed outside the 2021-22 stimulus era. Consumers also paid a higher share of principal in 2023 and 2024 than in any pre-pandemic year.

Rate Caps Would Reduce Access to Credit

A one-size-fits-all rate cap may sound like a quick fix, but it would restrict access to mainstream credit for consumers who most need flexibility. When regulated lenders cannot price for risk, consumers on the margin are more likely to lose access to credit and be pushed toward less-regulated alternatives.

The Policy Takeaway

Credit cards give millions of households a secure and flexible way to manage expenses, build credit, and participate in the economy. Lawmakers should not support one-size-fits-all rate caps because they would reduce access to regulated credit, thereby limiting a tool families rely on to manage short-term financial pressures.