6 Sad Facts About Credit Cards
Shockingly, not every aspect of credit cards radiates with happiness and light.
Shockingly, not every aspect of credit cards radiates with happiness and light.
Don’t get us wrong; we here at The Ascent are fans of credit cards. We like the financial power they put in our hands (provided, of course, they’re managed prudently).
In spite of this affection, we’re well aware that there are downsides to America’s favorite plastic. With that in mind, here’s a sextet of not-so-uplifting facts about our beloved rectangular debt instruments.
Featured offer: save money while you pay off debt with one of these top-rated balance transfer credit cards
1. Total card debt record: Over $1 trillion
Yes, that’s trillion. In 2017, for the first time ever, Americans’ collective credit card debt tipped over the $1 trillion mark; this past August it stood at over $1.04 trillion. The latter amount averages out to over $3,200 for every man, woman, and child in this country.
2. New record high for average APR
Not only are Americans taking on more credit card debt, they’re doing so at the highest rates in history. According to Experian, the average APR for credit cards is 16.81% as of April 2018. Only one year previously, that figure was nearly one full percentage point lower.
3. Cardholders are unaware of benefits
A recent study conducted by researcher J.D. Power revealed that over one-third of respondents didn’t understand their credit card’s rewards program. That means that there are millions of Americans that are not taking advantage of money-saving perks, ranging from free Wi-Fi on planes, to free car rental insurance, to airline lounge access, to purchase protection.
4. Issuers exploit usury laws
Usury laws are regulations capping the interest rate a bank or other lender can charge a borrower. These are set by the states and as a result can vary wildly; certain states have no usury laws.
In what’s probably not a coincidence, most major credit card issuers are based in states that have either have relatively high ceilings, or none at all.
5. The arbitration clause
Has your issuer wronged you in some way? Have you been cheated out of money by the lender you once trusted?
Well, too bad, because you probably can’t take it to court. Many credit card agreements have an arbitration clause baked into them, which waives your right to sue. Instead, your only legal recourse is to submit to a binding arbitration proceeding.
6. The U.S. lags behind in card security
Although American card issuers adapted the EMV microchip standard for cards earlier this decade, the vast majority of them are of the chip-and-signature variety. This means that you only need to sign with a chip card, as opposed to chip-and-PIN in which you sign but also enter a PIN number.
This far-more-secure technology is prevalent in markets abroad such as the European Union. Its rollout in this country has been awfully slow.
Alert: our top-rated cash back card now has 0% intro APR until 2025
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a lengthy 0% intro APR period, a cash back rate of up to 5%, and all somehow for no annual fee! Click here to read our full review for free and apply in just 2 minutes.
Our Research Expert
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent, a Motley Fool service, does not cover all offers on the market. The Ascent has a dedicated team of editors and analysts focused on personal finance, and they follow the same set of publishing standards and editorial integrity while maintaining professional separation from the analysts and editors on other Motley Fool brands.
Related Articles
View All Articles