6 Sad Facts About Credit Cards
by Eric Volkman | Dec. 26, 2018
The Ascent is reader-supported: we may earn a commission from offers on this page. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation.
Shockingly, not every aspect of credit cards radiates with happiness and light.
Image source: Getty Images
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.
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.
Top credit card wipes out interest until 2022
If you have credit card debt, transferring it to this top balance transfer card can allow you to pay 0% interest for a whopping 18 months! That’s one reason our experts rate this card as a top pick to help get control of your debt. It’ll allow you to pay 0% interest on both balance transfers and new purchases until 2022, and you’ll pay no annual fee. Read our full review for free and apply in just 2 minutes.
About the Author
Eric is an expert who has been covering personal finance since the mid-1990s. His articles have appeared broadly on sites such as MSN, USA Today, and Yahoo.
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 does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
