As Americans brace for new tariffs on international imports to raise prices on consumer goods, they also hold a record amount of credit card debt. That has many people wondering when they can expect the tariffs to actually impact their wallets.
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Bankrate Senior Industry Analyst Ted Rossman joined WWL’s Tommy Tucker this week to offer some insight.
Last week, Bankrate released its 2025 Credit Card Debt Report. Rossman, cited in the report press release, that New York Federal Reserve Bank data indicates that Americans hold $1.2 trillion in credit card debt and that Bankrate data indicates the average credit card rate is around 20%.
How could this debt be impacted by tariffs?
“The worry is that it’s going to lead to higher prices,” Rossman told Tucker. “We’re starting to see that trickle in. It’s been kind of confusing because it’s been, sort of, tariffs on, tariffs off.”
According to CNN, President Donald Trump has changed details on implementation of promised tariffs several times, “and the feasibility of some tariffs is being investigated by the US Department of Commerce,” as of Wednesday. The outlet published a list of what tariffs were effective at that time, including a 145% tariff on China, a 25% tariff on Canada, a 25% tariff on Mexico and a 10% universal tariff. Plans for reciprocal tariffs are currently on pause for negotiations.
For example, Trump said in a Wednesday Truth Social post that: “Japan is coming in today to negotiate Tariffs, the cost of military support, and “TRADE FAIRNESS.” I will attend the meeting, along with Treasury & Commerce Secretaries. Hopefully something can be worked out which is good (GREAT!) for Japan and the USA!”
Rossman noted that there seemed to be a “big pull forward in demand leading up to all of these announcements,” with people stocking up on items to push back the impact of tariff hikes on their household spending. U.S. consumers have been dealing with inflation prices for years in the wake of the COVID-19 pandemic’s impact on supply chains.
According to Rossman, the Yale Budget Lab predicts that the average household could end up spending about $4,000 a year more because of Trump’s tariffs. He said that will make the existing debt burden more difficult to manage.
“We see mixed signals here. On one hand, credit card delinquencies are up,” Rossman said. “They’re close to their highest point since 2011. On the other hand, the debt-to-income ratio is actually pretty low, historically speaking.”
Still, he noted that it’s hard to build wealth while you’re paying 20% month after month after month.
“I don’t want to shame anybody with credit card debt because a lot of people have it and it’s often a practical cause,” Rossman explained. “The number one cause is an emergency expense, like a medical bill or a car repair. Number two causes are day-to-day living just outpacing your paycheck, and that actually gets at the cumulative effective inflation, which gets back to the whole tariff thing because we’ve already had a lot of higher prices the last few years and a lot the people are feeling pretty tapped out and then prices may be going higher still.”
In a Tuesday update on tariffs, Yale’s budget lab said consumers faced an overall average effective tariff rate of 28%, the highest since 1901. It also said that, “even after consumption shifts, the average tariff rate will be 18%, the highest since 1934.”
Bankrate’s study found that around 64% of people with credit card debt have already delayed or avoided other financial decisions because of that debt. Rossman told Tucker that building an emergency fund is the biggest delay, that health and wellness spending is the second biggest delay and that the third is investing.
LSITEN TO ROSSMAN'S INTERVIEW WITH AUDACY HERE:
In order to weather a tariff-induced storm of higher prices, Rossman recommends some ways for Americans to get a handle on their debt. He said a getting a 0% balance transfer card is a good way to do that.
“Move your debt over to the U.S. Bank Shield Visa, for example, which has a 24-month, 0% promotion, really try to attack the debt during that term,” Rossman said. “Or another option is nonprofit credit counseling. Groups like Money Management International can often negotiate a 6% or 7% rate over four or five years, and they help you pay your debt back at more favorable terms.”
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