Selena Cooper, a 26-year-old resident of Columbia, South Carolina. She now confronts a deepening crisis that wreaks havoc on millions of Americans’ lives — skyrocketing credit card debt. Cooper has a total of $6,700 in debt on her three credit cards. Her financial situation was further complicated when, after Christmas, she lost her job permanently. This unexpected twist of fate made her rely on her income from her photography business. All the while, she fights against her growing pile of debt.
Her troubles reportedly started back in October when she first started defaulting on credit card payments. Since then, her financial burdens have only continued to increase. And since May, she’s been swiping her Discover card to cover daycare costs for her two-year-old daughter. Notifications Cooper got some good news early on when Capital One and American Express, two of her card issuers, notified her. They warned her with increasing interest rates due to her late payments. Her Capital One card just raised her interest rate from 8% to 16%, and her American Express recently increased from 10% to 18%.
The effect of all of these increased rates has been devastating. Cooper pointed out that the average credit card interest rate is an eye-popping 27% right now. Had she encountered that percentage, putting her daughter into childcare would’ve been economically unfeasible.
“Would help a little bit, but it’s still not going to get me out of debt,” Cooper expressed regarding the proposed cap on credit card interest rates.
Ideas for capping credit card interest have suddenly started gaining traction. Cooper’s experience illustrates the pressure many Americans, from all walks of life, are under. After all, reports indicate that average credit card interest rates have recently skyrocketed to almost 22% as of November. This is an impressive leap from only 13% ten years ago.
The proposed cap on credit card interest rates at 10% for one year beginning January 20 has sparked varied opinions among financial experts. Susan Schmidt noted, “It does show that consumers are feeling pinched; they’re going to continue to feel pinched.” Now, more than ever, we need intervention Schmidt argued, pointing to the uniqueness of the current economic climate as a time that calls for action.
Though some see the proposed cap as a sign of progress, others are warning that it could backfire in ominous ways. Elizabeth Warren cautioned that if the administration genuinely wants to address high interest rates or lower housing costs, it must leverage its influence more effectively.
“People will lose access to credit on a very, very extensive and broad basis, especially those who need it the most,” Jeremy Barnum warned, emphasizing the risks associated with such caps.
While legislators wrangle over these issues, people like Cooper are just hoping to make it through the day. She accepted that even a temporary cap will do little to relieve the sustained financial pressure that has resulted in climbing costs and diminished access.
“It’ll pay small bills—but not my credit card debt,” she remarked.
Cooper’s story is at the heart of a larger crisis of credit card debt in America. So many more people are going through the same, as the cost of living skyrockets and wages remain flat. The tension between paying the debt and feeding the family makes an all-consuming cycle that is hard to break.
Americans are just beginning to experience the impact of this interest on their personal budgets,” added economist Brian Shearer. This alone would save them $3,000 more on their household budgets.
Cooper calls photography her lifeline, as she operates her photography business full time. She looks forward to getting a job where she can start paying back her debt in earnest. “I’m losing sleep over the $6,700, but I have a little wiggle room to be able to do that because once I get a job, I can pay it off,” she said.
Cooper’s plight with credit card debt is a personal story. It brings attention to a deeply structural crisis that more of our fellow Americans are experiencing right now. House Speaker Mike Johnson found it unimpressive, urging policymakers to be purposeful in addressing such financial pressures.
“It’s something that we’ve got to be very deliberate about,” he stated.