Summary: American credit card users paid approximately $164 billion in fees and interest in 2022, with experts warning that the situation may worsen due to rising interest rates. The Biden administration is targeting credit card penalties and proposing changes to reduce late payment fees. Cardholders can minimize fees by negotiating with issuers, using autopay with caution, and staying informed about charges.
According to a WalletHub analysis, American credit card users paid a staggering $163.89 billion in fees and interest in 2022, a significant increase from previous years. The Consumer Financial Protection Bureau reported that such charges averaged about $120 billion per year from 2018 to 2020.
Experts predict that credit cards will become even more expensive for consumers this year. The Federal Reserve has implemented multiple rate hikes, pushing interest rates to record highs and causing outstanding balances to rise. Matt Schulz, chief credit analyst at LendingTree, warns that the situation may deteriorate before improving. Lower-income households, which are disproportionately affected by these fees, can end up paying hundreds of dollars annually.
In response to these concerns, the Biden administration is targeting ‘junk fees’ across industries, including credit card penalties. The Federal Trade Commission and the Consumer Financial Protection Bureau are working on reducing late payment fees, with proposed changes to limit the amount charged per late payment and eliminate automatic annual inflation adjustments.
To minimize credit card fees and interest, cardholders can negotiate with their issuers. Schulz suggests asking for lower interest rates or requesting late fee waivers. Surprisingly, the majority of cardholders who have tried this approach have been successful in obtaining lower rates or fee waivers. Using autopay cautiously is also recommended, as it can help avoid missed payments but doesn’t eliminate the need to monitor due dates and statement balances. In addition, staying informed about charges and reviewing card terms and conditions regularly can help cardholders avoid surprises and potentially reduce fees.
Overall, credit card fees and interest are reaching new heights, prompting consumers to be proactive in managing their credit card accounts and exploring ways to minimize additional charges.
Tags: credit card fees, credit card interest, Biden administration, late payment fees, autopay, credit card penalties