Credit card debt has reached an all-time high as Americans struggle to keep up with borrowing costs—raising another red flag about the state of household finances.

According to The Kobeissi Letter, a leading financial market commentator, credit card balances have surged by $204 billion over the past three years.

This represents a staggering 52% increase.

Because of this growth, “a record $628 billion in U.S. credit card debt is now unpaid or rolled over every month,” The Kobeissi Letter explained.

“This comes as the average interest rate on credit card debt spiked to a record 25% from 15% during this period,” the commentator said.

Over the past year, credit card APRs have been on the rise, making it harder for households to pay down their debt.

Contrary to what many think, revolving credit has become significantly more expensive not just because of interest rates; a lot of it has to do with rising bank margins.

Last year, the average APY margin stood at 14.3%—the highest in recent history.

In other words, credit issuers are hiking interest rates because they can, knowing that many Americans have few options other than borrowing.

At current rates, Americans are collectively paying more than $266 billion in annual interest charges on their $1.14 trillion in cumulative credit card debt.

The interest charges balloon to $318 billion when other forms of revolving credit are included.

America is more expensive than ever

As credit card balances and interest rates continue to inch higher, Americans are struggling to keep up with the rising cost of living.

While Federal Reserve economists take victory laps for allegedly crushing inflation, the reality for many Americans is that every facet of normal life is more expensive than it was five years ago.

According to data from the Bureau of Labor Statistics, overall prices have increased by 21.4% since the pandemic. It’s no wonder that credit card balances have risen by 30% from pre-pandemic levels.

High inflation has made more Americans fearful about missing their credit card payments.

The latest New York Fed survey of consumer expectations shows a 14.2% probability that Americans will miss their minimum credit card payment over the next three months.

That’s the highest rate since the pandemic lockdowns in April 2020.

The likelihood of a missed payment spikes to 20% for Americans who make less than $50,000 annually.

Meanwhile, missed payments—also known as delinquencies—have reached the highest level since record-keeping began, according to the Philadelphia Fed.

Zandi believes high interest rates are to blame.

High rates place more pressure “on households who have revolving debt, that aren’t paying off their cards and are using the card as a way to borrow money and have outstanding debt,” Zandi said.

Collectively, Americans pay $318 billion in interest rate charges when other forms of revolving credit are included.