Credit card debt is an increasingly heavy burden for millions of Americans.
Selena Cooper, 26, is among those dealing with the strain. A former paralegal at the Social Security Administration, she was left without a stable income when the US government shut down a few months ago. She lost her job permanently after Christmas.
Cooper first missed her credit card payments in October, when her paycheques ground to a halt. Since then, she said her debt across her three credit cards has accumulated to $6,000.
Last month, her card issuers Capital One and American Express notified her that they were raising her interest rates due to late payments. The rate on her Capital One cards doubled to 16%, while the one on her Amex jumped from 10% to 18%, she said.
Credit card rates have caught the attention of US President Donald Trump. Last week, he proposed capping them at 10% for one year from 20 January - an idea that Cooper said would help a little bit, but it's still not going to get me out of debt.
Cooper, who lives in Columbia, South Carolina, is now leaning on her photography business for income. It'll pay small bills - but not my credit card debt, she said.
Credit card interest rates have been rising in recent years. They averaged about 22% as of November, up from 13% a decade ago, Federal Reserve data shows. 37% of adults carry a credit card balance, and overall credit card debt in the US totals more than $1 trillion.
It does show that consumers are feeling pinched, they're going to continue to feel pinched, Susan Schmidt, portfolio manager at Exchange Capital Resources in Chicago, told the BBC.
The proposal has drawn criticism from banking executives who argue that capping interest rates would adversely affect consumer access to credit, potentially leading banks to cut credit limits or close riskier accounts. As the debate continues, consumers like Cooper and Morgan—who rely on credit for essential expenses—await clarity on the potential impact of this proposal on their financial futures.
