Source: Nerd Wallet
How will the changing political landscape affect the credit card industry and, thus, consumers? We’ll find out soon enough.
Last year was dominated by a dramatic presidential election and an economy that, while strong on paper, didn’t feel that way for many Americans. Here’s what we saw in 2024 when it came to credit cards and debt:
Interest rates began to fall, but credit card APRs are still catching up: The Federal Reserve lowered interest rates three times toward the end of 2024, but it took a few months for average credit card interest rates to follow suit and come down slightly from a record high.
Debt and delinquencies rose, but things could be stabilizing: According to NerdWallet’s 2024 American Household Credit Card Debt study, revolving credit card debt increased just 1.5% from September 2023 to September 2024. But when you look at that same timeframe for the year prior, debt levels increased by 15%. Credit card delinquency rates rose steadily since the latter half of 2021, but they leveled off a bit between the third and fourth quarters of 2024.
Attempts at certain industry changes stalled. The Credit Card Competition Act — first introduced in 2022, but still hotly debated in 2024 — aims to indirectly lower the credit card swipe fees merchants pay, by allowing them more choice among payment processing networks. Opponents, though, argue that any savings are unlikely to trickle down to shoppers, and they note that history suggests the plan could also negatively affect credit card rewards programs. Regardless, the legislation hasn’t meaningfully advanced in Congress. Separately, attempts by the Consumer Financial Protection Bureau (CFPB) in 2024 to cap credit card late fees stalled out when a federal judge blocked the new rule.
And just like that, we’re a quarter of the way through the 21st century. Here’s what’s coming in 2025 that could have unexpected impacts on credit cards.
- A new presidential administration
The second Trump administration is here. While that news seems more political than financial, decisions made in Washington can affect banks, financial technology companies and, of course, consumers.
One big unknown at this point is the fate of the CFPB, as the new Department of Government Efficiency — co-led by businessmen Elon Musk and Vivek Ramaswamy — takes aim at federal spending deemed to be wasteful. Musk has called for the elimination of the CFPB, which was originally created to enforce federal consumer financial laws.
But if the CFPB’s future is at risk, it’s going out with a bang. Since December alone, the CFPB has been busy:
It issued a circular to law enforcement agencies specifying “bait-and-switch” practices with credit card rewards programs that could be in violation of federal law.
It finalized a rule to eliminate medical debt from credit reports.
It sued Experian, saying the credit bureau failed to properly investigate consumer disputes, which have resulted in incorrect information appearing on credit reports.
“In my view, the CFPB in the last year has done a lot of things, and all of them help consumers,” says Adam Rust, director of financial services at the Consumer Federation of America. “If there’s a deregulatory shift in Washington, all of those things are at risk.”
Potential deregulation in the banking industry, which essentially would loosen some of the rules banks must follow, could have positive and negative consequences for consumers. It could make credit easier to access for those with a wider range of credit scores, and open up possibilities for new technological advancements in the industry. But it could also limit (or eliminate) some consumer protections.