Retail Credit Cards and Consumer Bankruptcy
Credit card debt is a significant problem for consumers throughout South Florida, and recent data from Forbes indicates that Americans owed a collective $1.21 trillion in credit card debt at the end of Q4 in 2024. Into 2025, that number has risen, and the average amount of credit card debt per household has risen steadily in recent years. Regardless of the type of credit card (or credit cards) on which debtors have revolving balances, interest rates tend to be very high. As such, it is often difficult for consumers to effectively pay down and eventually pay off credit card debt. And for those debtors who are struggling to make minimum payments, the addition of fees and penalties also add up. Credit card debt averages also vary by age and location, with those in Generation X (currently aged 44 to 59) carrying an average of nearly $10,000 in credit card debt.
According to a recent report from CNBC, while we might not think about retail credit cards as one of the major reasons for significant credit card debt, these types of credit cards have “record-high interest rates,” which are making it especially difficult for consumers to pay down those debts. Indeed, bankruptcy rates involving retail credit card debt have risen, and commentators suspect that those numbers will continue to rise.
Record Interest Rates on Retail Credit Cards
Why are retail credit card rates so high? They were recently reported to have an average of 30.45 percent, according to CNBC after banks raised rates. Banks raised those interest rates “in anticipation of the Consumer Financial Protection Bureau capping credit card late fees,” the report explains, but those caps on credit card late fees were never able to take effect. Banks did not respond as consumers might have hoped by lowering those higher interest rates. Accordingly, consumers with retail credit card debt are now dealing with extremely high interest rates on top of high credit card late fees that were not capped.
Furthermore, rates of credit card retail debt have been steadily rising since early 2021, likely an effect of early pandemic-era spending and consumers maintaining the same practices years later.
Consumer Bankruptcy and Retail Credit Card Debt
As CNBC reports, recent data shows that new consumer bankruptcy filings rose by 5.8 percent in 2024, but the number of bankruptcy filings that centered retail credit card debt rose by more than double that rate — by about 12 percent.
With consumers continuing to accrue debt on retail credit cards with particularly high interest rates, many of those consumers are unable to pay down the debt and are filing for bankruptcy. Like other forms of credit card debt, consumers can generally anticipate that retail credit card debt will be dischargeable in a bankruptcy case as long as the debt has not been accrued for “luxury” purchases according to US bankruptcy law.
Contact a West Palm Beach Bankruptcy Attorney Today
Do you want to find out more about filing for bankruptcy to have your retail credit card debt discharged? One of the experienced West Palm Beach bankruptcy lawyers at Kelley, Kaplan & Eller can speak with you today about your options.
Sources:
forbes.com/advisor/credit-cards/average-credit-card-debt/
cnbc.com/2025/06/19/how-retail-credit-cards-could-bankrupt-consumers.html
