Americans spent more than $100 billion on credit card interest and fees last year, new information from the FDIC analyzed by Magnify Money shows.
In the 12 months that ended on March 31, US consumers dropped $104 billion on the credit card charges. It’s the first time ever those figures have crossed the $100 billion threshold. The total amount of debt accrued on Americans’ credit cards at just over $1 trillion, the new data show.
The amount Americans are shelling out on interest and fees grew 11% from last year’s numbers. In the 12-month period that ended on March 31, 2017, the number sat at $93.7 billion. And just a few years ago in 2013, the figure was as low as $74.6 billion.
One reason behind the sharp increases in spending on fees: US credit card interest rates have been slowly creeping upward for years. Especially as the Federal Reserve continues to steadily raise rates — twice in 2018 already by a quarter point, and by three quarters of a point each in 2015, 2016 and 2017. Credit card companies raise their interest rates, too, but at a much steeper rate.
The average interest rate for a US credit card is 17%, according to CNBC, but that number can be much higher depending on the card and the user’s credit score.
Travel rewards cards holders who are attempting to score points for their next getaway need to be extra aware of this worrisome trend, particularly because travel cards carry higher interest rates than other cards. It’s one of the golden rules of travel rewards cards: Pay your balance in full. Otherwise, the amount you spend on interest will negate the benefits of the points and miles you earn.
After all, Magnify Money predicts that for 2019, US consumers will spend a whopping $110 billion on interest and fees. So aim not to let your points and miles balances be part of that figure.
(For further reading on travel rewards credit card dos and don’ts, check these posts, too: 4 Credit Card Mistakes You Should Never Make and 3 Ways Credit Card Beginners Can Avoid Biting Off More Than They Can Chew).
H/T: CNBC
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