The Missing Data Point in Consumer Debt Is What It Actually Costs

Consumers aren't just carrying more debt. They're carrying more expensive debt. As debt becomes more prevalent, understanding the cost of debt has become just as important as understanding the debt itself. 

Americans now carry more than $1.2 trillion in credit card debt, the highest level on record. At the same time, the Consumer Financial Protection Bureau reports the average credit card APR reached 22.8% in 2023 — nearly double where it stood a decade earlier. 

While most consumers know roughly the amount they owe at a given time, they don’t know the incremental costs associated with that debt. In the most recent survey of more than 600 consumers, nearly half (49%) of consumers said they don’t know the interest rates on their credit cards or loans without looking. 

And, for those building lending, debt management, marketplace, or personal finance experiences, current APR information remains a rough estimate — meaning they may not have enough information to build the most accurate products and experiences possible.

The Incremental Cost of Debt

Over the past several years, consumer credit data has become significantly richer.

Organizations can now retrieve liabilities, balances, payoff amounts, and account ownership faster and more accurately than ever before. Those capabilities help answer important questions throughout the consumer credit lifecycle, from prequalification to servicing and repayment.

As interest rates remain elevated, another question has become increasingly important: What is this debt actually costing the consumer?

That's where accurate APRs can add another layer of intelligence.

Balances tell you how much someone owes. APR helps explain what they're paying to carry that debt. Together, they provide a more complete view of a consumer's financial obligations.

Small Differences Can Have a Big Impact

Consider a consumer carrying a $5,000 credit card balance.

At 24.99% APR, that balance generates roughly $103 in monthly interest. Estimate that same balance at 20% APR, and the monthly interest falls to about $82. 

That's a difference of more than $20 per month, or approximately $246 per year, on a single account. And, this math doesn’t even take into account compounding interest rates or if the consumer continues to increase their credit card balance. 

Now multiply that difference across thousands of lending decisions, debt consolidation offers, payoff recommendations, and financial planning experiences. 

Even small differences can meaningfully affect projected savings, product recommendations, and customer confidence.

Introducing Real-Time Credit Card APRs

Spinwheel can now retrieve a consumer's current credit card APR to give teams greater confidence that they're building experiences around current information instead of estimates. The result is a more complete picture of consumer debt that supports:

• More accurate savings calculations

• Smarter debt payoff recommendations

• Better refinance and consolidation experiences

• More personalized financial guidance

By combining balances with current APR data, organizations can better understand what a consumer owes and what that debt costs today.