By: John S. Morlu II, CPA
America is under financial strain. U.S. credit card balances have reached about $1.23 trillion, the highest level on record. For millions of households, everyday costs now outpace income, pushing families to rely on credit just to get by.
This pressure has sparked new policy debate, including Donald Trump’s proposal to cap credit card interest rates at 10% for one year. At the same time, South Dakota remains central to how the credit card system works in America.
This article explains what’s driving the affordability crisis, why credit card debt keeps rising, and what realistic solutions could restore balance—without cutting off access to credit.
1. The Reality: $1.23 Trillion in Credit Card Debt
Credit card debt alone—not total household debt—now stands at $1.23 trillion, according to the Federal Reserve Bank of New York. That number matters because credit cards usually carry the highest interest rates consumers face.
For many households, cards are no longer used for convenience. They are being used to cover:
- Groceries
- Rent and utilities
- Medical bills
- Emergency expenses
When balances grow and interest compounds, debt becomes harder to escape.
2. Why Affordability Is Breaking Down
The affordability crisis did not appear overnight. Three forces are colliding—and together they are pushing more households into sustained financial stress.
1) Costs rose faster than pay
Housing, healthcare, insurance, and food costs climbed faster than wages for years. Even full-time workers are feeling squeezed.
2) Credit filled the gap
As costs rose, credit cards became the short-term solution. But high interest turns short-term help into long-term stress.
3) Interest rates stayed high
Many credit cards charge APRs above 20%. At those levels, minimum payments barely touch the principal.
The result: people work more, earn more, yet fall further behind.
3. Why South Dakota Matters
Most Americans don’t realize that many credit cards are legally based in South Dakota. That detail matters because it shapes what lenders can charge—and what consumers end up paying.
Here’s why:
- Decades ago, South Dakota removed limits on credit card interest rates.
- Major banks moved their credit card operations there.
- U.S. law allows banks to charge customers nationwide the rate allowed in the bank’s home state.
This made South Dakota a credit card headquarters—not because most customers live there, but because the rules are favorable to lenders. The system helped expand credit access nationwide, but it also allowed very high interest rates to become normal.
4. The 10% Interest Cap Proposal
President Trump’s proposal would place a temporary 10% cap on credit card interest rates. Supporters argue it would deliver immediate relief for families already stretched thin.
Supporters say a cap would:
- Lower monthly payments quickly
- Slow the growth of balances
- Give households breathing room
Critics argue it could:
- Reduce credit access for higher-risk borrowers
- Push some consumers toward unregulated lenders
Both sides agree on one thing: today’s system is under strain.
5. What the Data Really Suggests
Evidence from past reforms and global experience points to a middle path. The goal isn’t to swing from one extreme to another—it’s to reduce harm without destabilizing credit markets.
- High-interest debt worsens financial instability.
- Cutting off credit entirely creates new risks.
- The best outcomes come from balanced reforms, not extremes.
That means protecting consumers without breaking credit markets.
6. Practical Paths Forward
A sustainable solution requires more than one policy lever. Real progress will come from combining affordability improvements, modernization, and targeted protection.
Improve affordability
- Encourage lower-cost credit options
- Support savings buffers for emergencies
Modernize credit
- Expand credit unions and community lending
- Support responsible fintech alternatives
Target protection
- Limit excessive interest without banning risk-based pricing
- Improve transparency so borrowers understand true costs
These steps reduce harm while keeping credit available.
Conclusion: Restoring Balance and Trust
The $1.23 trillion credit card debt figure is not just a statistic—it is a warning signal. Families are doing what they can to survive rising costs, and the system is showing stress.
Whether through interest caps, smarter regulation, or better credit alternatives, the goal should be clear: credit that helps people move forward, not fall behind. Affordability is not about punishing lenders or blaming consumers. It is about rebuilding a system that works for both—and restoring trust in America’s financial future.
Author: John S. Morlu II, CPA is the CEO and Chief Strategist of JS Morlu, leads a globally recognized public accounting and management consultancy firm. Under his visionary leadership, JS Morlu has become a pioneer in developing cutting-edge technologies across B2B, B2C, P2P, and B2G verticals. The firm’s groundbreaking innovations include AI-powered reconciliation software (ReckSoft.com), Uber for handymen (Fixaars.com) and advanced cloud accounting solutions (FinovatePro.com), setting new industry standards for efficiency, accuracy, and technological excellence.