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<ul class="summary-list"><li>If you've gotten really into credit card rewards in recent years, you're not alone.</li><li>Some Americans go to great lengths to maximize points, sign-up bonuses, and cashback.</li></ul>Aaryan Desai picked up a hobby during quarantine: <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/credit-cards/best-credit-cards">researching</a> <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/credit-cards/transferable-credit-card-points-best-rewards-to-earn">credit card</a> <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/credit-cards/ways-to-use-credit-card-points-beyond-travel">rewards</a>.The 20-year-old swipes as much as he can. Right now he's <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/credit-cards/how-to-book-free-travel-cheap-deals-credit-card-rewards">banking points</a> for a concert in October and a big trip after he graduates from Georgia Tech.Desai is part of a new generation of credit card users: young, perks-focused, and ready to maximize. Today's credit cards, he said, are like the coupon books of yore. The perks might not always be the right fit, but, if you figure out a good configuration, you can find some big savings.For Desai and other <a target="_blank" class="" href="https://www.businessinsider.com/credit-card-rewards-points-friends-fights-brunch-money-payment-venmo-2024-7">rewards hounds</a>, the realization that they can perform a sort of points arbitrage was a real hook."Just using the money that I would be using otherwise or just getting together with friends and that, 'hey, I can just put it on my card and you can Venmo me later,' opening the door to getting 80,000 points from Chase or 175,000 from American Express — it was a new opportunity," he said, adding: "That's what got me into it."If it seems like the whole country suddenly has credit card point mania, you would be correct: An <a target="_blank" href="https://www.ipsos.com/en-us/majority-americans-value-their-credit-card-rewards">Ipsos poll</a> of 1,081 adults conducted from April 31 to May 1 found that 71% of respondents have a rewards or cashback credit card, and 68% said that they prefer using their credit card because of the rewards and points that they can earn.The poll found that a fifth of Americans ages 18 to 34 use their rewards to pay for things they wouldn't be able to afford otherwise. Younger Americans are flocking to previously fancy cards like <a target="_blank" href="https://www.businessinsider.com/american-express-platinum-card-gold-gen-z-millennial-rewards-2024-6">American Express</a>, willing to shell out hefty annual fees in exchange for perks like <a target="_blank" href="https://www.coachella.com/amex">exclusive access to Coachella tickets</a>.The rewards are a big reason <a target="_blank" class="" href="https://www.businessinsider.com/credit-card-rewards-points-friends-fights-brunch-money-payment-venmo-2024-7">credit cards</a> have become a cultural juggernaut among young Americans. As costs rise and <a target="_blank" class="" href="https://www.businessinsider.com/millennial-subsidy-uber-airbnb-prices-surge-pricing-dynamic-2024-8">the millennial subsidy fades</a>, credit card rewards help a new generation live lifestyles they may not otherwise be able to afford: first-class flights, hotel rooms, and VIP concert experiences. It doesn't hurt that social media is full of videos and blogs that offer the tantalizing promise of free trips, luxury lounges, and fancy restaurants — if you can cobble together the right puzzle of points and cards without digging yourself into too much debt.<h2 id="124d8b83-ad11-40eb-84a1-249d4ffa65bd">Living the high life on credit card perks</h2>At first, 29-year-old Willem Van Eck thought the rewards game was a snake oil salesman's gambit. Cut to: He's stretched out in a first-class seat, a glass of bubbly in hand."Wow," he thought, "this actually is a scheme that you can leverage with the right flexibility and with the right research," Van Eck, a software engineer in the Bay Area, said.Credit card rewards work as an incentive to get customers to swipe more. They can come in the form of cashback — which means you get a partial refund for a given purchase in the form of a credit on your bill or a transfer to another account. Or they come as points, which are more nebulous but can typically be used as currency for future purchases. And then there are other perks like hotel credits, airline miles, gift cards, and upgrades like Van Eck's.For instance, the Platinum Card from American Express — often considered one of the <a target="_blank" href="https://www.businessinsider.com/personal-finance/credit-cards/chase-sapphire-reserve-vs-amex-platinum-card#fees">top cards for rewards</a> — will cost you $695 in annual fees. In return, you'll get five points for every dollar spent on flights and a point for every other dollar spent. On average, <a target="_blank" href="https://www.businessinsider.com/personal-finance/credit-cards/what-are-points-miles-worth-value#amex-membership-rewards">per BI's calculations</a>, an Amex point is worth 1.8 cents. Say you spend $5,000, $2,500 of which went toward flights; you'd net 15,000 points, which could equal around $270 — a significant chunk of the annual fee.In addition, many cards will also offer substantial sign-up rewards. The Platinum Card offers 80,000 points for spending $8,000 in the first six months of holding the card. Those 80,000 points alone could be worth twice as much as the annual fee.Taking advantage of this system requires diligence and restraint to avoid paying more in interest and fees than you gain in rewards. According to <a target="_blank" href="https://www.federalreserve.gov/econres/feds/files/2023007pap.pdf">a paper</a> looking at who this system hurts and benefits, borrowers who carry balances and businesses — which pay a fee on each credit card transaction — subsidize the fun for the rest of us.Pre-pandemic, Van Eck was chasing cards with high sign-up bonuses, like the Chase Sapphire Preferred card, because they allowed him to transfer points to airlines so he could book business or first-class seats. During the pandemic, he took note of the <a target="_blank" href="https://www.wsj.com/articles/airline-cards-lose-luster-as-coronavirus-persists-11606991400?mod=article_inline">beefed-up bonuses and short-term benefits</a> that companies were offering in an attempt to lure customers; his Delta card offered a $15-a-month dining credit, for instance. That's when Van Eck noticed that more of his Gen Z and millennial friends starting to become adept at navigating their benefits.Van Eck is very cautious of lifestyle creep and ensuring that cards are worth his while, especially amid high interest rates, inflation, and recessionary fears."I've seen most of my peers, including me, reevaluate the value proposition of the cards," he said. Every year, he goes through his list of cards to see which ones paid for themselves without him changing his behavior. If one doesn't, he'll cancel it.But not everyone is as prudent as Van Eck. In the high-paying tech industry where he works, Van Eck still sees people changing their habits to maximize rewards, which he doesn't think is smart. This could be why delinquencies have been on the rise in recent years, with the youngest borrowers leading the pack. After all, credit cards are fun to use. No, really. Contrary to the belief that we overconsume with credit cards because they ease the pain of spending, <a target="_blank" href="https://mitsloan.mit.edu/experts/how-credit-cards-activate-reward-center-our-brains-and-drive-spending">research finds</a> that their bigger appeal is that they make our brains feel like we're getting a reward. All that stands between you and access to that first-class airport lounge are a few taps or swipes.<h2 id="0f454fca-2571-4637-a3e5-c54130cda971">Nothing good lasts</h2>Credit card companies aren't just giving away rewards for free.As Lulu Wang, an assistant professor of finance at Northwestern's Kellogg School of Management <a target="_blank" href="https://insight.kellogg.northwestern.edu/article/who-pays-generous-credit-card-rewards#">finds</a>, many businesses will pass on their costs to customers. For example, say you use a 1% cash back rewards credit card at your favorite local coffee shop on $100 worth of coffee for you and your friends. The shop pays a 2% fee on the transaction — $2 — to your card issuer. Then, your card issuer would use some of that 2% fee to give you your 1% back. To cover their fee, the shop might raise their prices."In some sense, when you benefit from those rewards, you're taking that money from some mix of the merchant and other cash and debit card consumers out there in the economy who are then not benefiting from those rewards," Wang said.Perks aren't always a great deal for everyone. Will Springer, a 41-year-old in Indiana, uses his Chase Sapphire Preferred and Amex Platinum cards primarily for perks like travel insurance and car rentals. Since he lives in a more rural area, an Equinox gym membership benefit is moot, and he can't really use the Uber benefit offered — he sometimes converts it into food delivery credit for Uber Eats.Other loyal credit card point users say you can't bank on your favorite perks sticking around. Brandon Zemel, a 32-year-old music producer in Las Vegas, puts pretty much everything on a credit card. He has two cards, the Chase Sapphire Reserved with a higher annual fee that's more travel-catered, and the Chase Freedom Unlimited, which has a fairly flat return on points. He said his travel card shaves hundreds of dollars off of his expenses, and he loves to use his points to get himself onto seat upgrade lists.But Zemel recently lost a hugely useful travel benefit: a "<a target="_blank" href="https://www.forbes.com/advisor/credit-cards/chase-sapphire-reserve-card-ending-priority-pass-restaurant-benefit/">priority pass</a>" that could be converted into a $28 dining credit for both him and a guest."It seems to be a thing these days that every year, two years, three years, these companies devalue their product or their perks provided by their product," Zemel said. "And I guess to some extent it's to be expected, but it does kind of remind you that the things that you currently enjoy are not necessarily going to be here long term."As Zemel has seen during his time as a cardholder, the rewards craze has basically "grown exponentially," propelled by popular blogs and TikTokers. That can also dim the appeal of previously exclusive perks, like overcrowded airport lounges."People got really used to anyone with a pulse basically having some kind of access to the lounge at the airports," he said. Now, Delta has <a target="_blank" href="https://www.cnn.com/travel/delta-ceo-bastian-skymiles-changes/index.html">recognized</a> that it had too many elite cardholders — leading it, in some cases, to restrict access to <a target="_blank" href="https://www.businessinsider.com/personal-finance/credit-cards/delta-sky-club-credit-card-access">lounges</a> to higher spenders.It's what Wang says is an example of "<a target="_blank" href="https://www.huffpost.com/entry/what-money-cant-buy_b_1442128">skyboxification</a>" — an increasing stratification of life among haves and have-nots, like a baseball stadium that's divided between crowds in the stands and richer fans in box seats."I can totally understand this looming dread that society is getting splintered into those who have access to this kind of stuff and those who don't," Wang said.I can relate to this sentiment. At a music festival this summer, I learned that my Chase Sapphire credit card would let me skip the line and access an air-conditioned tent with free water.However, when I arrived I learned a hard truth: I actually needed the card one tier above mine to get in. For one brief moment, as I gazed at the sparse crowd inside, I thought about applying on the spot. But I ultimately decided it wasn't in my best interest to incur a higher annual fee and open another line of credit.And yet, as I stood among the packed and sweaty masses, waiting nearly an hour to get food and water, I felt haunted by the skybox appeal. Would a new credit card do anything positive for my finances? Most likely not. Would it make me feel like a VIP at this event? Definitely. Maybe I'll try to get the Sapphire Reserve before next year's festival.Are you passionate about your credit card rewards? Have you gotten into debt trying to play the points game? Contact this reporter at <a target="_blank" href="mailto:jkaplan@businessinsider.com">jkaplan@businessinsider.com</a>.

Welcome to credit card points mania

Lana Linge has $42,000 in credit-card debt, but it's not the giant tab that has her most frustrated.The 29-year-old says she takes full responsibility for her debt. After getting her first credit card in her early 20s, Linge accumulated small amounts of debt but was always able to pay it off. That changed in 2020: Linge struggled with managing her spending on necessities and other items, like clothes, while in isolation, causing her bills to grow. Things got worse after she lost her job this past October, and she eventually depleted her savings to keep up with the payments on her card."I know for a lot of people, they're in debt because of these freak things that are outside of their control," Linge tells me. "The reason that I'm in debt primarily is from overspending, and I don't try and negate that in any way."Overwhelmed, Linge is going through the painful bankruptcy process to discharge the debt. Looking back, she regrets not paying more attention to the details of her card's interest rate. Wooed by the rewards and perks the companies were offering, Linge signed up for a card with an interest rate she says ballooned to over 20%. The growing interest payments meant that even as she worked to get her spending under control, the bills kept growing.Linge's experience may be on the extreme end of America's personal finance journeys, but she isn't alone in her interest-rate woes. Consumers are always looking for deals, and it's easy to be swayed by credit-card companies offering glitzy rewards and points. As Adam Rust, the director of financial services at the Consumer Federation of America, told me, issuers are "putting the sizzle before the steak." But many of these cards come with high rates and hidden fees, and by the time consumers realize just what they signed up for, credit-card companies have raked in the profits."Credit-card companies can get away with charging high rates of interest because consumers aren't necessarily paying attention and marketing doesn't focus on that," he said.The average credit-card interest rate is now just over 21%, up from about 15% a decade ago. More importantly, the gap between the interest rate that credit-card companies pay banks that oversee their business and the one they charge you is the widest it has been in nearly 30 years. Even with existing regulations and the recent interest-rate cuts from the Federal Reserve, credit-card companies have the power to exploit consumers, and people with growing debt piles have few avenues for relief. Additionally, as credit-card companies continue to charge high interest rates, more cardholders in debt become delinquent — and that could push the US economy closer to recession."What we're seeing from the data shows a rapidly deteriorating financial landscape for Americans," Bruce McClary, a senior vice president at the National Foundation for Credit Counseling, tells me, "with a lot of people teetering on the brink of severe financial crisis."<h2 id="ddbac9bc-8e83-4317-902e-7a4e1408e665">The squeeze is on</h2>Americans have a lot of debt piled up on their little pieces of plastic. The Federal Reserve Bank of New York said in August that Americans owed a record $1.14 trillion on their credit cards in the second quarter and that balances increased by $27 billion from the same period a year ago, a 5.8% jump. TransUnion says the average credit-card balance per debtor stands at $6,329, up by 4.8% from a year ago. Most worryingly, according to the New York Fed, the percentage of people who had fallen more than 90 days behind on their payments climbed to 6.4% by the end of 2023, up from 4% at the end of 2022. Austan Goolsbee, the president of the Federal Reserve Bank of Chicago, described those rising delinquencies as "uncomfortably high" and a "warning sign" for the economy.This may be worrying news for average households and the US economy, but it is wonderful news for the credit-card companies. Credit-card issuers make money in a few ways, but one of the most important is interest payments. When a customer doesn't pay off their full balance each month, they pay interest that the credit-card company collects, so increasing interest rates is an easy way to bring in more profit. To better understand the strength of the credit-card industry, look at the split between the federal funds rate — the interest rate at which banks make very short-term loans to each other, which is also used as the benchmark for almost every other type of loan — and the average credit-card interest rate. Data from the St. Louis Federal Reserve indicates the difference between the rates is at a nearly three-decade high, suggesting credit-card companies feel free to charge high interest rates regardless of what the Federal Reserve does with the federal funds rate."We should never lose sight of just how profitable credit cards are," Rust says. "You've got interest, you've got interchange, you've got late fees; credit-card companies are making so much money."The Consumer Financial Protection Bureau estimated in February that major credit-card companies earned about $25 billion in additional interest revenue in 2023 by raising their annual-percentage-rate margins, or the difference between the APR and the interest rate set by banks, known as the prime rate. It also found that major issuers raised the average margin by 4.3 percentage points over the past decade, to an all-time high. Using data on how Americans deploy their cards to paint a representative picture, the CFPB estimated that the margin increase cost the average consumer with a balance of $5,300 more than $250 in 2023. On top of that, the bureau's 2023 report to Congress on the credit-card market said companies charged consumers over $105 billion in interest in 2022, helping boost the profit margin for these companies to 5.9% from 4.5% in 2019.These staggering numbers are made possible by the tactics that credit-card companies use to lure in new customers. Antoinette Schoar, an economist at MIT who coauthored a paper examining credit-card companies' use of behavioral biases to acquire customers, says companies use data to determine a prospective customer's education and income levels and will tend to offer products with hidden fees and high rates to people with lower educational attainment and income. For example, a company might advertise a 0% APR, but the consumer might not realize that that rate can't last forever, leading them to take on balances higher than they can afford to pay off. She says that while the tactics companies use to appeal to certain consumers can lead to high balances and credit-card debt, the companies aren't the only ones to blame — government regulations to prevent this kind of misleading marketing by credit-card companies could force the companies to compete by offering customers a better deal."We need better regulation so that the card companies are competing on the right dimensions and not on increasing convolution or increasing confusion to their customers," Schoar says.<h2 id="a19bffcc-ffc0-46bd-9211-4a8e68d3409d">'The highest credit-card rates we've ever seen'</h2>Until 1978, most states had laws capping interest rates for credit cards and consumer products. But a Supreme Court decision that year allowed banks to charge whatever interest rate they wanted if they were headquartered in a state without a usury law. This inspired a race to the bottom, with states like South Dakota and Delaware doing away with their laws in order to attract more business from banks. The industry ended up with, as David Silberman, a senior fellow for the Center for Responsible Lending, put it, virtually "no legal constraints on the interest rate they charge." Lawmakers have tried to rein in the industry — for instance, the CARD Act, enacted in 2009, required card issuers to notify consumers of interest-rate increases at least 45 days in advance and put restrictions on things like late fees and withdrawal fees. The legislation, however, didn't cap interest rates or rate increases. Lowering the current high interest rates, and the profits that come with them, has become a priority across the aisle. GOP Sen. Josh Hawley introduced a bill in 2023 that would cap interest rates at 18% and impose penalties on companies that violate the cap. "Americans are being crushed under the weight of record credit card debt—and the biggest banks are just getting richer," Hawley said in a statement, adding that "capping the maximum credit card interest rate is fair, common-sense, and gives the working class a chance." Democratic Sen. Elizabeth Warren brought up the issue during a Senate hearing in May, saying credit-card companies had "grown their profits through interest and fees."The Federal Reserve cut its benchmark interest rate in September after holding it steady for over a year, but credit-card holders with high interest rates won't feel any relief off the bat. Michele Raneri, a vice president and head of US research and consulting at TransUnion, told me that's because consumers have to pay off their balances at the interest rate in place when they accumulated the debt, so the lower rate wouldn't apply."It'll take a while for the consumer to realize the benefit of it," Ranieri says.The high inflation of the past few years has also made it easier for consumers to fall into credit-card debt. Ted Rossman, a senior industry analyst at Bankrate, described the feedback loop of high prices and high interest rates as "a tough cycle to break." Credit-card companies know what they need to do to maximize profit: If they offer rewards and bonuses up front, they can snag new customers before they realize the high rates they're signing up for. Profits keep rolling in for issuers, while consumers fall further behind.<a target="_blank" rel="" href="https://www.businessinsider.com/author/ayelet-sheffey">Ayelet Sheffey</a> is a senior economic policy reporter on Business Insider's economy team.

Credit card companies are ripping you off like never before

<ul class="summary-list"><li>21-year-old Skylar Griffin has four credit cards, including and AmEx Gold and Platinum.</li><li>She got her first credit card as a freshman to build up her credit score and kept a strict budget.</li></ul>This as-told-to essay is based on a transcribed conversation with Skylar Griffin, a 21-year-old college student in Georgia. Griffin financial claims have been verified with documentation. The following has been edited for length and clarity.When I was a child, my mom often shared financial advice. She told us never to cosign for someone's loan and don't buy anything unless we could buy it twice.On several occasions, she advised us kids never to get a credit card unless we were responsible enough to pay it off each month.She didn't want us to struggle financially like she did as a single parent.In high school, I started watching YouTube videos about finances. I saw financial struggles firsthand, and I didn't want to be in that position as an adult. The videos taught me I'd need to build up my credit score to buy a car or a house or if I might need a loan.<h2 id="102ef261-a63c-412a-8936-6e2d5bc894d4">I got my first credit card before going to college</h2>In July 2021, I was preparing to study business management at Columbus State University in the fall. Without my mom's knowledge, I ordered a Bank of America student card. It was a Visa card with no annual fees. My mom wasn't happy. I reassured her I'd done my research and could handle the responsibility.During college, I worked at a call center during the school year, paid internships in the summer, and received refund checks because my scholarship was more than school costs. I also earned a bit of money doing social media content.My first card had a limit of $500. I would buy little things here and there, making sure I had enough in my checking or savings account to pay it off each month. I'd marked all the due dates in my calendar, and I was never late for a credit card payment. There were temptations to buy new clothes or tech, but I always fought it.<h2 id="fc7cfef9-313f-436d-be60-a1a46519f707">Getting an AmEx for the travel points</h2>I kept using the Bank of America card throughout my freshman and sophomore years of college, but in April 2023, I decided to take out an Amex Gold card as well.I'd heard about travel credit cards through watching financial advice videos online. If I used this card for buying groceries or dining out, my two main expenses in college, I would get four times the points to use on travel. Although I wasn't traveling much, I planned to travel. At the time, the card had a $250 annual fee, which was worth it for the points I felt.I only used my card for things I needed or had saved for. I never bought things just to earn points.In March 2024, I took a big leap and opened an Amex Platinum credit card. It comes with a high price tag — a $695 annual fee — but I thought the benefits outweighed the price. Because it was another Amex card, all of my points were added to the points earned from the Amex Gold.I only use this card for booking flights and hotels because this is what I get the highest points for. With the card, I get five times the points when booking flights and hotels, a $200 yearly airline credit, and a $200 yearly hotel credit.When I stay at Marriott or Hilton, I get 'high status' and often get my room upgraded. But my favourite perk is the CLEAR Plus membership which gets me through TSA quicker at the airport.I knew I was planning some big trips in 2024 to Japan and New York, and then a cruise to the Bahamas, so planned to make all my travel purchases on the Platinum. Since getting an Amex, I've been able to fly to Japan, New York, and Miami for free in 2024.With this card, I accessed airport lounges on the long trip to Japan and was part of the President's Circle with Hertz Car Rentals, so I was guaranteed a car upgrade when I rented a car to get around the country.<h2 id="ec2f29ef-d145-470e-972f-0e160d4e0cd5">I took out a fourth credit card so I could earn points for other purchases</h2>In June 2024, I decided to take out another Amex card — the Amex Blue Business Plus. This card means I can earn points paying for things like gas, that don't earn me points on my other cards.There's no annual fee, and I could only take it out because I'm considered a sole proprietor. I own a Mercari shop where I resell vintage clothes I find at flea markets.I only use my Bank of America card when Amex isn't accepted. I never use a debit card unless I'm pulling cash out of the bank.Even though I am confident and comfortable using credit cards, I still don't spend anything that isn't in my checking or savings account. I never base a purchase on the money that I'm expecting in my account, because you never know how finances could change.I put all my due dates in my calendar and aim to pay each of them off earlier than required. Sometimes, I feel the urge to overspend. But then I remember the interest rates on my cards, and I snap back to reality. Paying high interest because I can't afford to pay my bill in full is not worth the momentary satisfaction of shopping.In addition to all the benefits I've received when traveling, my credit cards helped me raise my credit score to 755.<h2 id="1abacec9-c073-4582-ac5e-15c3908118fc">I never stop learning about finance</h2>I think college students should consider getting a student credit card with no fee. They have low limits and can help start building a credit score. However, if you're impulsive or have poor spending habits, I wouldn't recommend it.My mom now says she's proud of how I manage my finances. I've always found personal finance interesting and the concepts easy to understand, but it takes dedication to stay on track financially. I never stop learning to make sure I'm doing what's best for my financial future.

I'm a college student who pays nearly $1,000 in annual fees for 4 credit cards. It's worth it for good credit and travel perks.

Pam's circle of parent friends likes to <a target="_blank" class="" href="https://www.businessinsider.com/how-much-kids-cost-raising-child-inflation-childcare-tax-exemptions-2024-1">split the financial load</a> when it makes sense, whether it's ordering pickup or delivery, going out for a group meal, or getting <a target="_blank" class="" href="https://www.businessinsider.com/cost-summer-camp-childcare-inflation-parents-debt-work-schedules-2024-7">tickets to a theme park or a movie</a>. But there's one dad who has recently picked up a habit that irks her: He insists on putting all their group purchases on his credit card.The gesture comes off as nice, but it ends up making extra work for Pam because she's constantly having to use apps like <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/digital-payments-apps-send-my-kids-money-2023-9">Splitwise or Venmo</a> to pay him back. Even when it would be easier if she just paid her family's part, he seems to slide his card in first. Once, when the guy was in line in front of her at a fast-casual restaurant, he waited for her to order before butting in to try to put the purchase on his card. It's not the end of the world, but Pam told me it's bothersome — especially because this dad acts like no one is picking up on what's going on. He's not doing all this out of the kindness of his heart; he's doing it because he wants the <a target="_blank" href="https://www.businessinsider.com/personal-finance/credit-cards/ways-to-use-credit-card-points-beyond-travel">credit-card rewards</a>."I overheard this person say that, 'Oh, with all of this spend on my credit card, I get 5% off this or 20% off this.' And I'm thinking, 'Oh, so this is just benefiting you,'" Pam, who lives in San Francisco and asked to use a pseudonym so the jerk in her group wouldn't know she thinks he's a jerk, told me. "I like people who are just up front versus trying to sneak things in and manipulate."Consumers love their rewards. In a recent poll from Ipsos, 71% of Americans surveyed said they had some sort of rewards, points, or cash-back card, and 80% of those with such a card said they valued their rewards. They'll cling onto those rewards even if it means a tough outcome for others: A 2019 LendingTree survey found that people were likelier to support a cap on how high credit-card companies could set their interest rates if the limit reduced access for people with imperfect credit than they were if it meant the cap would lower their rewards. Credit-card issuers and banks love rewards, too — they're a good way to attract customers.But maybe we love our credit-card rewards too much, to the point that it's making us act in less-than-ideal ways toward those we hold near and dear. Money is always complicated, and the standoff over who gets 1.5% cash back or three times the airline miles after paying for brunch is no exception. And it seems like no matter who picks up the check, everyone is a bit dissatisfied: For every Jane angry at Joe for insisting on putting everything on his credit card so he can upgrade his honeymoon to Singapore, there's a Mary fuming at Mike for shortchanging her when he paid back his part of the bar tab, making the points she got for paying the up-front cost a wash."It does seem like one of those ultimate pick-your-battles kinds of things," Matt Schulz, the chief credit analyst at LendingTree and the author of "Ask Questions, Save Money, Make More," said in an interview. "It's an awkward thing, and you just don't want to be that person who makes things uncomfortable over something like credit-card rewards."But credit-card rewards are, indeed, making things uncomfortable.Plenty of people have had the experience of the check landing after a group meal and multiple people trying to put their credit cards down so they'll earn the rewards. Usually, it winds up fine — you agree to split it, or you all decide to take turns, one person pays this time for the points, another next time. Not everyone at the table cares about maximizing their rewards, but just like some people are super into Taylor Swift or fantasy football, others are obsessed with gaming credit-card points. Whatever the case, a lot of points-related interactions can start to feel pretty icky pretty fast. Take a spin around Reddit, and you'll find all sorts of rewards-related conflicts. There are people complaining that their spouses don't want to play the rewards game, and other point obsessives weighing whether it's OK to refuse to split their rewards with their point-indifferent partners. <a target="_blank" href="https://www.reddit.com/r/AmItheAsshole/comments/108kjlj/aita_for_paying_for_my_share_of_the_trip_with/">One user asked</a> whether they should be expected to share their travel bonus with friends after booking a group trip. <a target="_blank" href="https://www.reddit.com/r/CreditCards/comments/vstsmq/paying_with_points_on_a_group_trip/">Another sought advice</a> after a friend asked whether they might be able to use their rewards to get a discount on a hotel for their group of friends. "I do have points," the person wrote, "but they are perks I get." They asked whether it might be acceptable to use their points but charge people the monetary value of the booking anyway.Jen, from Chicago, pays for everything she can to rack up rewards, and she's pretty sure it doesn't bother anyone else. "I haven't really run into anyone who's been super pissed off," she said, though she cools it in professional settings. If anything, it's a hassle for her. When traveling in a group, she's typically burdened with all the planning so that she can put all the flights and hotels on her card. Her partner refuses to get his own rewards card, which is frustrating, so she finally made him an authorized user on one of hers so at least she can get points from his purchases. "He doesn't seem to care," Jen, who asked to withhold her last name to protect her privacy, said. "Everything he gets, I get paid back."She did recently have a small dispute over points at a dinner with two longtime friends. When the roughly $120 check came, Jen took out her card, as she always does, but noticed another friend did, too. She'd gotten a new card through work and wanted to rack up points for flights. They decided to split the bill in half so that both got their points. Their third, nonpoints friend sent them each a Zelle payment, getting no reward for her trouble. When I asked Jen how much she thought the haggling was worth, she said maybe a couple of bucks. But it all adds up, she insisted. "It's enough for me, over time, to where it matters," she said. "I'm not trying to be greedy."A small disagreement over credit-card points isn't going to end a relationship, but it is a situation where animosity can build up over time, especially if there isn't good up-front communication. The person constantly in debt to the person who puts everything on their card can start to feel like they're being taken advantage of, and the person trying to track everyone down to get paid back can get upset, too."It is more work to chase down all of the payments, and so I think you have to decide for yourself what is the value of the rewards that you're going to earn by putting this whole thing on your card? And is that worth the time and energy?" Emily Thompson, a credit-cards editor at The Points Guy, said. If you're trying to hit $8,000 in spend to get a welcome bonus, the answer might be yes. If you're earning a point per dollar, which is worth about $0.01 in many cases, you may want to stand down. Lending money is often fraught, and people are effectively doing this when they toss everything onto their credit cards. In a CreditCards.com survey, 59% of respondents who had lent money or paid for a group expense with the expectation of being paid back said they'd had something bad happen. Forty-two percent of lenders said they lost money because they weren't repaid, and 26% said their relationship with the borrower was damaged."People should tread carefully because it only takes one person stiffing you for it not to be worth it," Ted Rossman, senior industry analyst at Bankrate, said. "Are you OK taking the risk? Are you going to follow up? I find that there are very quick diminishing returns with this. If you don't get paid back quickly, you probably won't get paid back at all."Someone slightly miscalculating the tip or tax on the reimbursement might negate the rewards earned, not to mention if they miss the payment entirely. Eating a $50 loss in the name of $2.50 in rewards is not a worthwhile trade-off.Friendships come with so much more gray area compared with, say, business relationships. What may seem completely fine to someone — taking a couple of weeks to pay a friend back or asking a friend to pay the cash equivalent of points they used for a hotel booking — might seem completely out of line to someone else."There are more clear terms for business, for romantic partnerships. But in friendship, what's normal? What's not? What do I owe you? We don't know," Danielle Bayard Jackson, a friendship coach and educator, said. "We have a lot of these friendships that end prematurely or that get bogged down by a lot of resentment and confusion."Most people I talked to about this story had some sort of rewards-related anecdote with at least mild tension. One person said his friend group never has a problem with points hoarding … before name-checking one friend who goes too far. Another said she sees paying on her card at restaurants as a way to save servers the headache of trying to divvy up the bill, though that means she has to warn everyone that she's a big tipper and make sure they're on board. I recently booked a fight with a friend who remarked she'd gotten some $300 in travel credit from her rewards card. I briefly wondered whether she would offer to split the discount with me. (She didn't, and she was right.)"As much as calculating the value of the rewards that you can earn, you also have to calculate any potential negative impact on your relationship with the person," Thompson said. When she books trips for friends using her rewards, she comes up with a price that's still a "really good deal" for her friends, but it "isn't nothing," she said. That seems fair, though I'd be curious what her friends think. It's not just friendships that credit-card points can get in the middle of — but also romantic relationships. Matt (a pseudonym), from Alaska, got super into rewards a couple of years ago, watching endless YouTube videos and scouring financial-advice websites for tips. His wife was not so into it — she's the "kind of gal that's like, 'Just give me the stupid card if I use it if you want but don't expect me to have this rotating collection,'" he said. The issue came to a head when they planned a trip to Florida. Matt was procrastinating on booking, so his wife went ahead and did it without using the right card. He had her cancel everything so he could rebook with the card he wanted to use, but that wound up being a mistake — when he went to make the new reservation, prices had increased."We lost the rooms and things that she booked, and we ended up paying more. And for what? We got like 2% back on the whole deal," he said. "I should have just let her be right and be done with it."Matt has pretty much given up on the rewards game now; he uses a 2% cash-back card but doesn't pay much attention beyond that. All the hassle around it "got to be pretty stupid," he said, and the Florida drama was just "petty shit." He and his wife are now divorcing (but not over the points).Whether all this fuss over rewards is justifiable, relationally and financially, is context-dependent. Points maxing isn't low effort, and unless you're willing to spend a bunch of time figuring the system out, you're just wasting your and everyone else's energy in trying to hoard rewards. More importantly, if you are not paying off your credit-card bill at the end of every month and instead are carrying a balance, the rewards are not worth it."If you carry a balance, you shouldn't be chasing rewards. You should be focusing on paying your balance down," Schulz of LendingTree said. "You don't have to be an accountant to understand that paying 27% interest to get 2% cash back doesn't make a whole lot of sense."Credit-card rewards can be great, and they're definitely popular. Plopping down an <a target="_blank" href="https://www.businessinsider.com/american-express-platinum-card-gold-gen-z-millennial-rewards-2024-6">American Express Platinum Card feels fancy</a>, as do the perks that go along with it. But as with everything, there are trade-offs.On a macro level, the rewards aren't free. They're funded by <a target="_blank" href="https://www.businessinsider.com/stores-credit-card-companies-battle-fees-2018-9">swipe fees</a> paid by merchants that often get passed on to all consumers in the form of higher prices, regardless of how they pay, on top of interest payments and late fees. One recent Federal Reserve study found that this system led to a redistribution of $15 billion in wealth each year from the poor to the rich, the less educated to the more educated, and high-minority areas to low-minority areas.On a micro, more day-to-day level, rewards are a fun, little benefit that can become unfun fast. A local restaurant implements a 3% surcharge for credit cards to try to make up for swipe fees, and suddenly you find yourself vowing to never return even though the difference for you was $1.50. Or you see a friend on Instagram bragging about upgrading their flight and realize that's why they've been so insistent on putting brunches and happy hours on their card all year. Even though it doesn't really affect you, you feel a little cheated.Experts say if you're the points maxer trying to charge every group purchase, it's good to be up front about what you're doing. (As in, don't be like Pam's dad friend.) But if people don't want to go along, you might just need to accept that. Or realize that if they are going along, they may still think what you're doing sucks.<a target="_blank" href="https://www.businessinsider.com/author/emily-stewart">Emily Stewart</a> is a senior correspondent at Business Insider, writing about business and the economy.

Credit card rewards are turning us into jerks

Most people have, at some point in their lives, made an <a target="_blank" href="https://www.businessinsider.com/millennial-regret-buying-house-remote-work-travel-airbnb-buyers-remorse-2024-1">"oops" purchase</a> — you buy a thing and almost immediately regret it. In the age of online shopping, such purchases are <a target="_blank" href="https://www.businessinsider.com/impulse-spending-retirement-delayed-2024-5">easier than ever to make</a>. They are not, however, easier to reverse. Sometimes, you can quickly cancel an order, but oftentimes, the window to do so is so tight that you end up missing it.I recently found myself in such a situation. I bought yet another inane thing I really do not need that I will not name because it is slightly embarrassing. Before anything had shipped, I reached out to the seller to call the whole thing off. Unfortunately, I was denied. Annoyed, mostly at myself but also a little bit at the seller, I had a sinister thought: What if I file a dispute with my credit-card company? I could try to initiate a <a target="_blank" href="https://www.businessinsider.com/personal-finance/what-is-a-chargeback">charge-back</a>, say the shipment was taking too long or I'd ordered it erroneously, and maybe get my money back. Perhaps I could even get to at least try the thing I was pretty sure I didn't want, but hey, if it was free. To be clear, I did not do this, and I don't know whether it would have worked. But I seriously considered it. One of the best perks of my credit card — the ability to dispute a transaction to get a refund — had almost turned me into a bit of a jerk. Without knowing the term for it, I'd weighed engaging in first-party fraud, colloquially known as "friendly fraud," an increasingly common phenomenon where customers, accidentally or intentionally, dispute legitimate transactions as fraudulent with their credit-card issuer or bank.A credit-card charge-back happens when a consumer sees something they don't like or recognize on their statement and asks the bank to look into it. The bank then investigates the claim and decides whether to issue a refund — under federal law, a consumer can't be on the hook for more than $50 for an unauthorized charge. The merchant can respond, too, if they have proof that the transaction was fine. The bank plays the umpire and decides what to do with the money — maybe it takes it back from the merchant and gives it to the customer, maybe it makes the consumer cough the money up, after all, or maybe it pays out both parties and eats the cost itself."Charge-backs are a huge problem for many merchants. That's not something they can just sweep under the rug," said Oscar Bello, the chief sales officer at Chargeback Gurus, a company that helps merchants navigate charge-backs and manage disputes.There are plenty of legitimate reasons to file disputes and initiate a charge-back, first and foremost, for a transaction that was made by a fraudster, not the consumer. There are other fair explanations, too — there was a billing error, the product or service wasn't delivered as promised, the transaction wasn't authorized in the first place.Then there are charge-backs that can toe the line, ethicswise, or even tip into fraud by the cardholder. People lie and say they didn't get a pair of shoes delivered, even though they did, or they say the shoes came damaged, even though they were fine or had a tiny bit of damage but were still plenty wearable. Perhaps they cancel a restaurant reservation and dispute the cancellation fee, even though the penalty was listed plainly on the restaurant's website. Or a person paid to have their car fixed up and then said the workmanship was shoddy. In those instances, the customer is engaging in fraud or crossing a questionable line, but it can be hard for credit-card issuers to tell what actually happened. It can be quite the ordeal to trace whether a shoebox shipped in the mail wound up in the buyer's hands, let alone for a bank to decide whether all the work an auto-repair shop did was necessary and good.There's no "silver bullet" for figuring out who's in the right in every instance of a consumer dispute, said Domenic Cirone, the vice president of acquirer solutions at Kount, a fraud-prevention company owned by Equifax. And as much as artificial intelligence is helpful, he added, you often need people to sift through the data and complexities. And, he said, most consumers are well-meaning.Charge-backs and friendly fraud aren't new issues, but they're ones <a target="_blank" href="https://www.businessinsider.com/retailers-lost-millions-in-organized-online-refund-fraud-scheme-2023-11">exacerbated by e-commerce</a>. It's a lot easier to say that the sweater you got at the Gap never arrived than it is to claim you bought it at the store and, I don't know, forgot to take it with you or suddenly realized once you got it home that it sucked. A 2023 report from Ethoca, a Mastercard-owned platform that helps merchants handle fraud and disputes, said charge-backs in the US could reach $15.3 billion by 2026, more than double the $7.2 billion in 2019. Much of that is friendly fraud: The report cited a statistic from the data-analytics company Datos Intelligence that 75% of all the fraud digital businesses see is first-party fraud.Beyond the <a target="_blank" href="https://www.businessinsider.com/retail-enters-new-normal-ecommerce-brick-and-mortar-2022-11">e-commerce explosion</a>, some other factors have made <a target="_blank" href="https://www.businessinsider.com/free-shipping-free-returns-online-shopping-companies-charging-expensive-amazon-2024-2">friendly fraud more commonplace</a>. Consumers are increasingly using disputes for service-related issues — a product showed up damaged, or a service wasn't up to snuff. Inflation and economic pressures may also make the prospect of disputing a charge more appealing.What's more, people are constantly <a target="_blank" href="https://www.businessinsider.com/banks-cashless-world-disaster-economy-business-fintech-cash-crypto-2022-6?">paying through digital transactions</a> that are really hard to keep track of. Perhaps they <a target="_blank" href="https://www.businessinsider.com/subscription-services-forgotten-cost-consumers-payments-2022-6">don't remember making a purchase</a>, or their <a target="_blank" href="https://www.businessinsider.com/teen-spends-life-savings-tips-protect-money-2024-3">kid put something on their card</a> and didn't tell them, so they mark the charge as fraudulent even though it wasn't. Last year, I almost committed accidental friendly fraud against an airline because I forgot I'd paid to check my bag and tried to dispute the charge before realizing it."It's really quick and easy to check out, which is great because we love that as consumers. That leads to a lot of transactions," Robert Painter, the vice president of global channel sales at Kount, said. "The old adage, more money, more problems, right? So in addition to that, there's confusion."Of course, what's happening here on the end of consumers is not always confusion — sometimes, it's taking advantage of the system. Kevin, an entrepreneur who asked me to keep his identity protected because he was worried his business partner would get mad at him for talking to the press, has lost thousands upon thousands of dollars and endless hours on what he believes are frivolous and often fraudulent disputes. One of his gigs is selling tickets for a swamp tour near New Orleans. According to Kevin, people who go on the tour have disputed charges because they claim they didn't see enough alligators. Or customers of his auto-transport company, which he recently sold, disputed claims because their vehicles arrived a day or two later than desired or, in one case, because a driver didn't speak "good" English. Essentially, some people are using disputes as a review system, and if they don't give the experience five stars, they tell the credit-card company they want their money back. Kevin has won charge-backs before — he recently succeeded in pushing back against a cancellation claim after customers agreed to move their tour time but then backed out at the last minute. More often than not, however, he loses, and regardless, the whole thing is a huge time suck."Customers now, what we found post-COVID, are very trigger-happy on the dispute system," Kevin said.Kevin is not above using questionable dispute tactics as a consumer himself (he recognizes the irony here). He recently successfully disputed a $200 charge from a golf course after being told he couldn't change a tee time.The ability to dispute transactions is generally a <a target="_blank" href="https://www.businessinsider.com/credit-card-travel-alert-fraud-detection-american-express-visa-chase-2024-5">nice benefit of credit cards</a> and one that most consumers use as a last resort once they've tried to talk to the merchant (if they can get ahold of them). Still, it's weird that Citi or Amex or whoever ends up playing arbiter in charge-backs because the business incentive is to prioritize the customer over the merchant. It's hard to feel bad for big businesses that might lose money on a transaction that barely registers on their records, but for smaller businesses, this can really be a strain.In some cases, there's a pretty clear line between what is fraud and what's not, what's a legitimate charge-back and what isn't. Your online order never arrived, and the customer-service number never picked up: legitimate. Your order arrived and you claim it didn't: fraud. Right or wrong, many cases never get litigated out to the end, anyway."Not every merchant is equipped to fight," Bello of Chargeback Gurus said.There's some gray area, too. If you place an order and it arrives in 12 days instead of the 10 days promised, you might very well win in a dispute. Is that really fair? Mmm.I do not know whether my dispute on the mystery item would have been approved. (It was some stupid health supplements I saw online, OK?) But I wouldn't be shocked if it did. I've never disputed a purchase before, and my credit-card company would like to keep me happy. I do not think I would have felt particularly bad about initiating a charge-back, either, since <a target="_blank" href="https://www.businessinsider.com/supplements-vitamins-bad-or-good-health-2017-8">the supplements industry is unregulated and scammy anyway</a>. That doesn't mean it would have been the most awesome thing for me to do.<a target="_blank" href="https://www.businessinsider.com/author/emily-stewart">Emily Stewart</a> is a senior correspondent at Business Insider, writing about business and the economy.

One of the nicest perks on my credit card is making me a jerk

<ul class="summary-list"><li>I spent a year saving up credit-card points, then used 33,000 miles (plus $5) to <a href="https://www.businessinsider.com/quit-corporate-job-moved-buenos-aires-2024-4">move to Argentina</a>.</li><li>For the next seven months, I continued to rack up points for <a href="https://www.businessinsider.com/san-carlos-de-bariloche-argentina-little-switzerland-south-america-photos-2023-12">smaller trips around South America</a>.</li></ul>The idea to move from New Jersey to Buenos Aires came to me one afternoon while watching the <a href="https://www.businessinsider.com/diego-maradona-dead-at-60-reports-argentine-press-2020-11">Diego Maradona</a> (famed Argentine soccer player) biopic series on Amazon Prime. I had only ever visited once before for a three-month backpacking trip, and I always knew I wanted to go back.As a daughter of Dominican immigrants, relocating to a <a href="https://www.businessinsider.com/moved-to-spain-from-us-better-work-life-balance-2024-1">Spanish-speaking country</a> and exploring a largely unknown place at my own pace was a dream. But <a href="https://www.businessinsider.com/surprising-things-moving-to-ireland-from-us-2022-2">moving abroad</a> — like cooking meat in an asado — is a slow and steady process. I allotted myself one year to prepare, save, and, most importantly, rack up credit-card points to help soften the financial blow. Here's how I did it. <h2>I started by signing up for a new card with a hefty bonus offer</h2>I've been <a href="https://www.businessinsider.com/things-to-know-before-booking-trips-with-miles-points-expert">using credit-card points to fly</a> around the world on a budget for years, so I knew the biggest bang for my buck came from <a href="https://www.businessinsider.com/personal-finance/credit-cards/best-current-credit-card-signup-bonuses">credit card sign-up bonuses</a>.At the time, the <a href="https://www.businessinsider.com/personal-finance/credit-cards/capital-one-venture-x-rewards-credit-card-review">Capital One Venture X card</a> was offering 100,000 miles, or $1,000 in travel credit, after spending $10,000 within the first four months. It was a huge deal. Typically, cards might offer two times the miles on every dollar spent — this was five times that.Once approved, I immediately used the card to pay for all of my regular bills, day-to-day purchases, and other travel bookings. I even lent the card to trusted friends, who then reimbursed me for their purchases in cash. Simultaneously, I used my existing <a href="https://www.businessinsider.com/personal-finance/credit-cards/best-credit-cards-for-united-airlines">United Airlines credit card</a> to book flights for my family members. We use the airline frequently, which meant I was continuously adding to my cache of miles. Within a year, I had enough to book a one-way United flight to Buenos Aires for 33,000 miles (plus $5 in taxes).<h2>My points took me all around Argentina — and into other South American countries</h2><div type="image" title="busy pedestrian street in argentina" height="2071" width="2762" msid="113466362" hostid="261" sizebytes="769046"></div>By the time I touched down in Argentina, I had long surpassed the entry rewards on my Capital One card. I kept regular bills such as phone and streaming apps on it to continue racking up rewards, but it was finally time to focus on the next phase of the plan: Spending the points.Unfortunately, I couldn't use them for my rent, but luckily, my fully furnished apartment only cost me $650 a month. Instead, I used my points to cover things like my daily food and activities (about $300 a month) and pay for all my trips around South America. As a freelancer with a very flexible schedule, I intended to explore as much of Argentina as possible. But I also wanted to visit Brazil and Chile — especially since I had to leave at least every three months to keep my visa active.Since I wasn't sure how long I wanted to stay, I didn't <a href="https://www.businessinsider.com/cheapest-countries-where-you-can-buy-citizenship-or-residency-2022-8">apply for formal residency</a> in Argentina. Instead, I used the 90-day tourist visa limit as an excuse to visit other nearby countries. This process proved to be simple; I once crossed into Chile by car and returned to Argentina with a new visa start date hours later.Capital One provides a portal to purchase flights, but local carriers usually offer cheaper rates on their own websites. Because of this, I've found the best way to use miles is to retroactively cover the cost of purchases made on other platforms.Using this system, I was able to cover my flights to Bariloche, El Calafate, Iguazu, Mendoza, Ushuaia, Rio de Janeiro, and São Paulo. Occasionally, I had enough to pay for my Airbnb or hotel there, too.<div type="image" title="world cup celebration in argentina" height="1250" width="1667" msid="113466368" hostid="261" sizebytes="409316"></div>I learned cultural nuances, ate my body weight in steak, and adapted my Dominican American Spanish to the Argentine accent. One of the highlights of my seven months abroad was celebrating <a href="https://www.businessinsider.com/video-argentina-france-world-cup-highlights-2022-12">Argentina's World Cup win</a> at the Obelisco Buenos Aires and chanting the national song alongside 5 million local fans. At each location, I swiped for activities and food and used those newly accumulated miles to book the next trip. It was a constant loop feeding itself. <h2>The move only ended up lasting 7 months, but it was an incredible experience</h2><div type="image" title="people lounging in a natural pool in south america" height="1248" width="1664" msid="113466364" hostid="261" sizebytes="397422"></div>Instead of squeezing Argentina's major highlights into a rushed and complicated tour, I visited seven cities over a seven-month stay. This slow travel style saved me a ton of money — especially since I didn't <a href="https://www.businessinsider.com/used-travel-credit-card-reach-elite-status-airline-2024-9">fly back and forth to the US</a>. My time in South America offered me a new perspective on migrating. I respect my parents for completely uprooting their lives in the 1980s with no internet or common language. Unfortunately, unlike them, I wasn't able to do it for the long haul. Although I have since returned to <a href="https://www.businessinsider.com/new-jersey-to-puerto-rico-biggest-culture-shocks-2024-9">New Jersey</a>, I continue to use credit-card points to fund my travels. They don't pay for everything, but they make massive undertakings (like moving abroad for seven months) more seamless than ever before.

I lived and traveled abroad for 7 months using credit-card points. My stash of miles meant I barely had to pay anything out of pocket.

<ul class="summary-list"><li>US consumers are struggling with soaring credit card debt and rising interest rates.</li><li>Experts said the debt increase is the most concerning for younger adults.</li></ul><a target="_blank" href="https://www.businessinsider.com/black-friday-sales-record-thanksgiving-cyber-monday-online-deals-bnpl-2023-11">Consumer spending</a> helped keep the US economy afloat in 2023, but <a target="_blank" href="https://www.businessinsider.com/recession-outlook-economy-consumer-spending-gone-2023-9">some cracks</a> could be starting to show.<a target="_blank" href="https://www.businessinsider.com/credit-card-interest-rates-late-fees-are-rising-recession-2023-11">Credit card debt</a> is now at record levels, and interest rates on those cards have soared. The result is that delinquent balances on debts, in general, and credit cards, specifically, are skyrocketing, and a rising number of Americans are now trying to find a way out as the US faces a credit card crisis.According to data provided to Business Insider by <a target="_blank" href="https://www.moneymanagement.org/">Money Management International</a> (MMI), a nonprofit credit counseling agency, the number of Americans who sought counseling for their <a target="_blank" href="https://www.businessinsider.com/black-friday-cyber-monday-holiday-shopping-discounts-sales-prices-2023-11">debt soared after the holidays in January</a>.<div type="image" title="Number of people seeking debt counseling and average volume of debt." height="767" width="1079" msid="107915105" hostid="261" sizebytes="39970"></div>While the chart above looks most problematic for people in their 30s and 40s, an age group that touches both millennials and GenX, Thomas Nitzsche of MMI noted they are most worried about people in their 20s, Gen Z and younger millennials.This group represented the fewest counseling cases in early 2022 but has recently effectively matched people in their 50s and only trail people in their 30s and 40s."We're especially concerned with the increase among young adults in their 20s," Nitzsche told Business Insider. "We expect this to continue as student loans come back online, interest rates and balances are elevated, and the cost of living remains high."<h2>The US is facing a credit card crisis</h2>It should come as no surprise that the number of people worried about their debt is rising.According to the <a target="_blank" href="https://www.newyorkfed.org/medialibrary/interactives/householdcredit/data/pdf/HHDC_2023Q4">Federal Reserve Bank of New York</a>, total household debt in the US has risen more than 24% since before the pandemic in 2019 and now sits at $17.5 trillion.Of that total debt, credit card balances are growing the fastest. Americans owe a record-high $1.13 trillion on their credit cards. That total increased by 4.6% in the third quarter of 2023 — <a target="_blank" href="https://www.businessinsider.com/consumer-debt-credit-card-balances-fed-loans-mortgage-student-loans-2023-11">the ninth straight quarter with a rise</a> — even before the holidays, and faster than the overall debt growth rate of 1.2% in that period.According to <a target="_blank" href="https://fortune.com/recommends/credit-cards/average-credit-card-debt/">a Fortune calculation</a> using data from the Federal Reserve Bank of New York in Q2 of 2023, the average credit card balance was $5,733 per cardholder, while the average for those who do not pay off their balance every month is much higher. <a target="_blank" href="https://www.bankrate.com/finance/credit-cards/credit-card-debt-survey/">According to a Bankrate survey in November</a>, only 49% of Americans carry a credit card balance month-to-month.Americans are also struggling to pay their credit card bills on time more than other types of debt. <a target="_blank" href="https://www.newyorkfed.org/medialibrary/interactives/householdcredit/data/pdf/HHDC_2023Q4">According to the Fed</a>, more than 6% of all credit card balances are in serious delinquency, more than double the rate seen just two years ago and still rising.<div type="image" title="Debts in serious delinquency." height="1336" width="1892" msid="107915107" hostid="261" sizebytes="112286"></div><a target="_blank" href="https://www.jpmorgan.com/commercial-banking/ginger-chambless">According to Ginger Chambless</a>, the head of research for JPMorgan Chase, this represents a shift from mortgage delinquencies to credit cards."In the 2005-2010 period, there was a lot more delinquencies in mortgage debt, which is about 65% to 70% of overall household debt," Chambless told Business Insider. "In recent years, mortgage delinquencies have stayed very low as they are largely locked in at low fixed rates."This can be seen in the chart below. During the subprime housing crisis, from roughly 2007 through 2010, mortgage delinquencies, and hence total delinquencies, rose faster than credit cards and even fell slower after the peak.We are now seeing the same trend in credit cards, with delinquencies rising much faster than overall debt.While this could create a parallel between today's credit card crisis and the mortgage crisis of 15 years ago, there are a few important differences today. Employment is strong and real wages have risen in recent years. Additionally, failing to pay a credit card bill will not likely result in losing your home and the years of equity you've paid into it.Still, the rise in credit card debt and delinquencies could point to cracks in the strength of Americans' spending power.<div type="image" title="New delinquent balances (30+ days), percent of current balance" height="363" width="550" msid="107915108" hostid="261" sizebytes="9442"></div><h2>Interest rates are not helping</h2>What makes the credit card situation worse is that not only is debt soaring, but so are interest rates.The Federal Reserve started hiking rates in March 2022 to get inflation under control. Credit card interest rates, already at their highest level since the mid-1990s, started soaring even higher.<div type="image" title="Credit Card interest rates" height="924" width="1200" msid="107915110" hostid="261" sizebytes="43172"></div>Based on current balances and interest rates, <a target="_blank" href="https://www.businessinsider.com/credit-card-interest-rates-late-fees-are-rising-recession-2023-11">which have exceeded 30% in some cases</a>, the average American spends $1,140 every year, or about 2% of their pre-tax income, on credit card interest and fees alone.And all of this still doesn't consider the growing "<a target="_blank" href="https://www.businessinsider.com/buy-now-pay-later-phantom-debt-hurt-consumers-us-economy-2024-1">phantom debt" of buy now, pay later</a> payment plans. Americans are increasingly turning to these plans over credit cards, but we don't know the full extent of this burden on the American consumer since these loans are often not reported to credit agencies.A <a target="_blank" href="https://wellsfargo.bluematrix.com/links2/html/2bfba33d-9769-4756-9db7-cc6a7ac5807e">December report from Wells Fargo</a> found that buy now, pay later balances were about 2.5% the size of credit cards in 2021, up 1,000% from 2019.The use of buy now, pay later soared even more this past holiday season. <a target="_blank" rel=" nofollow" href="https://business.adobe.com/resources/holiday-shopping-report.html">According to Adobe</a>, which tracks online sales, buy now, pay later plans use was up 47% on Black Friday and 43% on Cyber Monday.Many people are confident that the US economy has successfully <a target="_blank" href="https://www.businessinsider.com/recession-federal-reserve-interest-rates-cuts-soft-landing-us-economy-2024-2">avoided a recession</a> — although <a target="_blank" href="https://www.businessinsider.com/recession-outlook-financial-crisis-economy-federal-reserve-yield-curve-rosenberg-2024-2">some are still worried</a>. But while a credit card crisis may not weigh as heavily as the mortgage crisis of the late 2000s, there are signs that the soft landing could be rougher than hoped.Are you struggling with credit card debt or taking on extra jobs to pay your bills? Contact this reporter at <a target="_blank" href="mailto:cgaines@businessinsider.com">cgaines@businessinsider.com</a>.

Americans are facing a credit card debt crisis

A Delhi consumer forum has directed the <keyword id="13222" type="General" weightage="20" keywordseo="sbi" source="Orion">SBI</keyword> Cards &amp; Payments Services Pvt. Ltd. to pay Rs 2 lakh to a person here for sending him bill even after his card's expiry and blacklisting him for non-payment of the charges. The New Delhi District Consumer Disputes Redressal Forum comprising its president Monika A Srivastava and members Kiran Kausal and Umesh Kumar Tyagi directed the company to pay the amount to M J Anthony, a former journalist, for "deficiency in providing services". The forum noted that the company had blacklisted him in the CIBIL system of the wilful defaulters maintained by the RBI, which resulted in the rejection of his applications for credit cards from another bank where he had maintained regular account for nearly two decades. "This Commission is of the view that the SBI Cards &amp; Payments Services Pvt. Ltd. has been deficient in providing services to the complainant and though the damage/loss occasioned to the complainant in terms of credit rating cannot be measured in terms of money yet punitive damage ought to be awarded against OP (opposite party) therefore, OP is directed to compensate the complainant by paying a sum of Rs 2 lakh as compensation within two months from the date of this order failing which the sum payable would be Rs 3 lakh," the forum said. The forum passed the order on May 20 on Anthony's complaint seeking compensation, claiming that he had requested the company to cancel his card in April 2016 much before its expiry and not to renew it. He did not use the card for any transaction after April 9, 2016 and had destroyed the card according to rules, he said, adding that no payment was due at that time on the card. In September, the complainant received a letter from the company about the cancellation of his card, however, the company continued to send bills relating to the card ignoring his protest e-mails, he said. The bills were to the tune of Rs 2,946 by May 18, 2017 inclusive of late payment charges and penalty, he said. He stated that in the same letter, the company had warned him to pay the bill otherwise it would "have adverse impact on the credit history as maintained by the credit Bureau and may hamper future credit requirement". The company further blacklisted him in the CIBIL system of the wilful defaulters maintained by RBI and he had trouble in getting loans or credit card. During the argument, the company had denied the allegations. SEE ALSO:<a href="https://www.businessinsider.in/personal-finance/news/how-some-companies-are-helping-habitual-borrowers-consolidate-their-loans/articleshow/100494588.cms" target="_blank"></a> <a href="https://www.businessinsider.in/personal-finance/news/how-some-companies-are-helping-habitual-borrowers-consolidate-their-loans/articleshow/100494588.cms" target="_blank">Neck deep in debt? Here’s how some companies are helping habitual borrowers consolidate their loans</a><a href="https://www.businessinsider.in/india/news/indians-want-to-spend-the-2000-note-but-it-doesnt-look-easy/articleshow/100496839.cms" target="_blank"></a> <a href="https://www.businessinsider.in/india/news/indians-want-to-spend-the-2000-note-but-it-doesnt-look-easy/articleshow/100496839.cms" target="_blank">Indians want to spend the ₹2,000 note but it doesn’t look easy</a> <a href="https://www.businessinsider.in/careers/news/highest-number-of-entry-level-jobs-and-salary-in-bengaluru-as-per-foundit-report/articleshow/100499355.cms" target="_blank"></a> <a href="https://www.businessinsider.in/careers/news/highest-number-of-entry-level-jobs-and-salary-in-bengaluru-as-per-foundit-report/articleshow/100499355.cms" target="_blank">Maximum City: Highest number of entry level jobs In Bengaluru &amp; it pays freshers more than other metros</a>

SBI penalised for sending bills to man despite credit card's expiry

<ul class="summary-list"><li>Some Americans have seen success when negotiating for a lower medical bills.</li><li>Medical billing offices might be willing to offer a discount to collect an immediate payment.</li></ul>For the last two years, Erin Duffy has studied a little-known strategy some people use to save money: <a target="_blank" href="https://www.businessinsider.com/guides/health/itemized-bill">negotiating </a>their medical bills.Initially, she just had anecdotal evidence of this strategy in action, Duffy, a research scientist at the University of Southern California who specializes in health policy and economics, told Business Insider.One of her more recent anecdotes came from a colleague who received a <a target="_blank" href="https://www.businessinsider.com/how-save-money-on-medical-bills-insurance-tips-2024-4">medical bill</a> they thought was "wildly high." The person said they called the billing office and were immediately given three options.Option No. 1 was to apply for financial aid if they were low-income, but they didn't qualify. Option No. 2 was to set up a <a target="_blank" href="https://www.businessinsider.com/personal-finance/personal-loans/medical-loans">payment plan</a>, which would spread out the cost over time but not reduce the amount. Option No. 3 was more to their liking: If they paid that day over the phone with a debit or credit card, then they'd get a discount."They paid less than half of the original bill amount, just because they were paying right away over the phone," Duffy said, adding that this is sometimes called a "prompt pay."While Duffy was intrigued by these stories, she said she found little research on the experiences of people who tried to reduce their medical bills. So, two years ago, she started creating a survey to help fill that void.Americans are no strangers to negotiation. Every year, people negotiate their <a target="_blank" href="https://www.businessinsider.com/how-much-money-to-ask-for-in-a-salary-negotiation-2015-5">salaries</a> and how much they pay for things like <a target="_blank" href="https://www.businessinsider.com/how-i-negotiated-my-cable-bill-2015-7">cable</a>, <a target="_blank" href="https://www.businessinsider.com/things-you-can-negotiate-to-save-money-2018-7">internet</a>, <a target="_blank" href="https://www.businessinsider.com/personal-finance/how-to-lower-your-bills-script-to-negotiate-2019-6">cellphone</a>, <a target="_blank" href="https://markets.businessinsider.com/news/stocks/useful-tips-that-will-help-you-negotiate-better-car-insurance-prices-1001903253">car insurance</a>, and <a target="_blank" href="https://www.businessinsider.com/how-to-negotiate-lower-rent-tight-rental-market-2024-4">rent</a> bills. But when it comes to medical bills, many people just accept the cost, despite the fact that Americans collectively have <a target="_blank" href="https://www.businessinsider.com/inaccurate-medical-bills-trap-americans-doom-loop-credit-reports-cfpb-2022-3">billions</a> of dollars in medical debt and spend <a target="_blank" href="https://www.oecd.org/en/data/indicators/health-spending.html">more</a> on healthcare than any other developed country.Duffy's <a target="_blank" class="" href="https://mann.usc.edu/news/its-worth-challenging-that-troubling-medical-bill-study-finds/">survey</a> through USC, which was published in August, asked more than 1,000 US adults last year whether they'd recently received a "problematic" medical bill that they thought they couldn't afford, was unfairly high, or contained a mistake. The USC survey found that less than two-thirds of people who received a problematic medical bill decided to challenge it.However, healthcare experts told BI that trying to negotiate medical bills — while far from a guaranteed strategy — is worth a shot.Among the survey respondents who reached out to a billing office about an unaffordable bill, 49% said they received some form of price relief — including financial aid, bill cancellation, or a price drop. The survey also found that 62% of respondents who contacted the billing office to try to negotiate a lower bill — whether because they couldn't afford or it because they thought the bill was unfairly high — were able to get the cost dropped."We don't normally think about medical bills as something that you can negotiate, but it seems that sometimes you can," Duffy said.To be sure, most people Duffy surveyed didn't have an issue with their bills — and many of those with an issue didn't bother challenging the bills. Therefore, the sample size of people who contacted a billing office and pushed for a lower cost was small: Duffy said much more research is needed before any larger conclusions can be drawn.However, the survey's findings aligned with what Duffy and other <a target="_blank" href="https://www.consumerfinance.gov/ask-cfpb/what-should-i-do-if-i-cant-pay-a-medical-bill-en-2125/">healthcare</a> industry experts have been <a target="_blank" href="https://www.npr.org/2023/03/24/1165953653/medical-bills-debt-negotiation-forgiveness">hearing</a> for years. If you're persistent and a bit lucky, you might be able to negotiate a lower <a target="_blank" href="https://markets.businessinsider.com/news/stocks/how-to-get-financial-help-for-expensive-medical-bills-1030237702?miRedirects=1">medical bill</a>.<h2 id="54b411b8-d1b7-43fc-b72f-878e053b5ad7">"It's always worth it to ask"</h2>Patricia Kelmar, senior director of healthcare campaigns for the consumer advocacy organization PIRG, regularly hears from Americans about their frustrations with healthcare costs. She said that trying to negotiate a medical bill sometimes pays off."Based on the dozens of conversations I have with patients who reach out to us with their medical bill problems, I know that negotiating prices works," Kelmar told Business Insider, adding, "People do get discounts just by asking to pay less."Kelmar recalled an anecdote from a colleague who called a billing office two years ago after they received a medical bill that they thought would be challenging to pay off. The billing office came back with a proposal."They said, 'We have a sale today,' and they gave him like 20% off his bill," Kelmar said, which amounted to a couple hundred dollars.Offering people a discount could sometimes be in the best interest of billing offices. Their objective is to get people to pay their medical bills, but many people — whether it be for financial reasons or otherwise — don't pay them in a timely manner. As of June 2023, <a target="_blank" href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-finds-15-million-americans-have-medical-bills-on-their-credit-reports/#:~:text=As%20of%20June%202023%2C%20about,from%2014%25%20in%20March%202022.">about 5%</a> of Americans, about 15 million people, had unpaid medical bills."I suspect that billing offices are willing to offer you a discount if you pay on the spot in person or on the phone because it's so hard for them to collect patient payments," Duffy said.Healthcare centers rely on more predictable insurance payouts, rather than patients' payments, to support their finances. However, some are beginning to demand patients <a target="_blank" class="" href="https://www.businessinsider.com/american-hospitals-corporations-charge-upfront-surgery-healthcare-2024-5">pay in advance</a> before performing certain procedures.In the years ahead, Kelmar said increasing consolidation in the healthcare sector could reduce the amount of "individual decision-making" in medical billing offices, potentially making them less likely to dole out discounts. But for now, she said encouraging people to try to negotiate their medical bills is still worthwhile."Patients should have the confidence to ask for a lower price because we know that some people are getting a lower bill," she said, adding "It's always worth it to ask."<h2 id="bdbb4acb-3620-436e-97fd-35f52002bb30">How to negotiate a medical bill</h2>Before anyone tries to negotiate a medical bill, Kelmar said they should do everything they can to ensure it's accurate. This includes asking for itemized bills and appealing denied insurance claims."People should realize that AI is doing a lot of the denials and appealing gets human eyeballs on that denial," she said.Next, Kelmar said people should check if they qualify for financial assistance through a hospital policy or government program like Medicaid."That might actually eliminate your bill or give you a big discount," she said.If this doesn't work, it might be worth trying to ask for a lower cost. Medical bills from healthcare providers tend to include a phone number for the billing office."They should just say, 'I can pay this much today or by the end of the month — do you want me to pay that and forgive the rest?'" Kelmar said.Kelmar said a billing office might be willing to reduce the bill if you put the payment on your credit card that day. She said this option could work for some people, but it's worth being cautious. That's because medical debt is subject to certain consumer <a target="_blank" href="https://www.thirdway.org/memo/states-lift-the-weight-of-medical-debt-from-american-families#:~:text=Effective%20in%20March%202024%2C%20a,of%20a%20patient's%20monthly%20income.">protections</a> that could be lost if one pays their medical bill with a credit card.If negotiating doesn't work, Kelmar said people should ask if they can be put on a payment plan to give them more time to pay their bills, adding that they should push for a low or no-interest plan.<h2 id="a9c47a33-7812-493d-a27c-a4da2286b12f">Why some people don't negotiate their medical bills</h2>Duffy and Kelmar have a few theories about why some people don't bother trying to negotiate their medical bills.First, the <a target="_blank" href="https://www.businessinsider.com/big-corporations-unitedhealth-optum-cvs-walgreens-taking-over-healthcare-industry-2024-4">US healthcare system</a> is quite complicated, so it can be difficult for many people to understand their medical bills — much less have the confidence to challenge them. Some people might not be aware that challenging their medical bills is something they can even do or do not know how to go about it.Additionally, negotiating a bill sometimes requires more than a single call — Kelmar said it can be a time-consuming process that requires persistence. Finding the time and energy can be difficult, particularly for people who are still recovering from a medical surgery or treatment.Lastly, it could come down to one's personality. Duffy said her survey found that people who are more extroverted — according to a standardized personality assessment — were more likely to challenge a problematic medical bill.Kelmar wishes US healthcare costs were lower so fewer people would be stuck with steep medical bills, but until things change, she recommends people continue to advocate strongly for themselves."Be confident in asking for what you need and you may very well see your bill go down," Kelmar said. "This isn't a great system. We need to fix it."

Medical bills are more negotiable than you think

<ul class="summary-list"><li>US credit card debt hit $1 trillion for the first time ever this year.</li><li>That's actually not excessive when considering factors like wage growth, experts told Insider.</li></ul>America's collective credit card bill has never been higher — but despite the eye-popping dollar amount, the consumer debt situation isn't as bad as it seems, experts told Insider.<a href="https://www.businessinsider.com/consumer-credit-card-debt-tops-1-trillion-first-time-ever-2023-8">The $1 trillion milestone for US credit card debt</a> was met with concern from commentators earlier this year, who feared that Americans' spending habits are becoming unsustainable, especially amid dwindling pandemic savings and an uncertain economic outlook. To be sure, $1 trillion is a lot, but that figure needs to be examined in the context of other factors, like income and wealth, economists say. And with those considerations, the hefty credit card balance in the US actually isn't much of a problem. "In aggregate, I think consumers are in good shape and they have not overborrowed," Mark Zandi, the chief economist of Moody's Analytics, told Insider. "Low-income households, less true. They've been more stretched and having more difficulty. But in aggregate, consumers are in a pretty good spot."That could spell good news for the economy, as Wall Street forecasters have warned that the <a href="https://www.businessinsider.com/us-economy-resilient-consumer-spending-may-not-last-bloomberg-survey-2023-9?inline-endstory-related-recommendations=&amp;_gl=1*1pfab8m*_ga*MjMxMzA1Mzg2LjE2NTY0NDQxNTU.*_ga_E21CV80ZCZ*MTY5NTMxOTYyOC42NjAuMS4xNjk1MzIxOTkxLjUzLjAuMA..">weakening American consumer</a> could pose a huge vulnerability to economic growth. <a href="https://www.businessinsider.com/us-households-on-brink-household-savings-dry-up-september-fed-2023-9">Americans are set run out of their excess savings</a> by the end of this quarter, according to the San Francisco Fed – an event some analysts have said <a href="https://markets.businessinsider.com/news/stocks/recession-outlook-us-economy-growth-slowdown-savings-investment-interest-rates-2023-4">could raise the risk of a recession</a>.But there are five signs those concerns are misplaced – and <a href="https://markets.businessinsider.com/news/stocks/economy-no-recession-consumer-spending-strong-stock-market-outlook-debt-2023-7">consumers and the economy are doing just fine</a>.<h3>1. Spending growth has remained stable, despite blowing past the $1 trillion milestone</h3>The nominal figures behind the total credit card balance are misleading, especially when you adjust for inflation. Real consumer spending growth has actually stayed stable at around 2% for the past few years, Zandi said. That's a healthy pace – strong enough to sustain economic growth this year, but not so strong as to overheat the economy and stoke higher inflation."I think consumer spending has been exactly where it needs to be," Zandi told Insider. "It's actually quite incredible how consumers have calibrated their spending. Not too much, not too little, just right, exactly what you want to see."<h3>2. Credit card utilization is low</h3>Credit use is actually fairly modest in the grand scheme of things, Zandi says.According to Michele Raneri, the vice president of financial services research at Transunion, credit card utilization has stayed around 22%. That's a fairly sustainable ratio, as it means Americans have room to tack on more to the credit lines should an unexpected emergency come up. "And even more recently, they've started to pull back in significant part because they don't need the cash as much as they did a year ago because inflation has declined and wage growth is stronger than inflation," Zandi added.Americans' real incomes are also rising, Zandi said, which can help consumers build wealth and slow down their credit usage. <a href="https://www.bls.gov/news.release/realer.nr0.htm">Real hourly wage growth accelerated 0.5%</a> year-over-year during the month of August, the Bureau of Labor Statistics reported.<h3>3. Some of the debt is being fueled by first-time credit card holders</h3><a href="https://www.businessinsider.com/gen-z-rack-up-credit-card-debt-faster-millennials-genx-2023-3">GenZ is a big contributor to the latest surge in credit card debt</a> – which is normal, Raneri said, since that generation is at the age where many are starting to get access to credit for the first time. Gen Zers are also not high-income earners – so it makes sense that they're making more use of credit cards, which helps young consumers stretch their spending and keep up with the pace of inflation, she added.Total balances on credit cards held by Gen Z were up 52% to $55 billion over the past year, according to second quarter TransUnion data, though total balances across all US card holders was up just 17% to $963 billion. <a href="https://www.bls.gov/news.release/realer.nr0.htm" target="_blank" rel="noopener">That's the fastest credit growth rate of growth out of any generation,</a> with Gen Zers contributing around 17% of all new US consumer debt added over the past year.<h3>4. Americans are cushioned with tons of equity</h3>Though some lower-income consumers are in danger of defaulting or slipping into delinquency on their credit card debt, Americans are shored up with tons of equity, Raneri said, mainly in the form of rapidly appreciation home values. In fact, LendingTree noted this summer that <a href="https://markets.businessinsider.com/news/commodities/housing-market-homeowners-equity-trillion-lendingtree-house-prices-value-rates-2023-8">Americans are sitting on a whopping $$28.7 trillion of home equity</a> that can be tapped if needed, and Wells Fargo has said that the huge run up in home prices in recent years could <a href="https://markets.businessinsider.com/news/commodities/housing-market-home-values-consumers-prices-savings-fed-inflation-2023-8?utm_medium=ingest&amp;utm_source=markets">keep consumers afloat in the event of a downturn</a>. There are also fewer new loans being issued now compared to more distressed periods like 2008, for instance – which is why Raneri doesn't see any risk of another crisis resulting from consumer debt."There's a cushion there that consumers can still use to absorb as they repay the debt that they've got or straight out what their spending is," she added.<h3>5. Delinquencies are slowing</h3>The delinquency rate on credit card loans rose to just 2.77% over the past quarter, according to <a href="https://fred.stlouisfed.org/series/DRCCLACBS" target="_blank" rel="noopener">Fed data</a>. That's only fractionally higher than the delinquency rate in the second quarter of 2019, before the pandemic, and it's well-below the delinquency rate during the 2008 crisis, which saw credit card delinquencies peak at 6.77%. Lenders are also tightening their underwriting standards before doling out cash, Zandi said, which should help the delinquency rate decrease in the future. Already, the delinquency rate on loans issued in 2023 is lower than the delinquency rate on loans issued in 2021 and 2022. That suggests credit card delinquencies will soon peak around the fourth quarter of this year before declining, he estimated.In fact, Zandi doesn't see America's spending boom as a problem unless the US has a recession, which could spark job losses and cause delinquencies to rise. But that isn't his expectation over the next year:"I think the economy will be resilient enough, in part because consumers are in such good financial shape in aggregate, that we won't suffer a recession between this time and the end of 2024," he said – all good news for the private debt picture.Government debt is a different story. The <a href="https://markets.businessinsider.com/news/bonds/treasury-yields-jump-us-debt-hits-record-33-trillion-2023-9#:~:text=US%20national%20debt%20has%20ballooned,its%20policy%20meeting%20on%20Wednesday.">US debt balance just notched $33 trillion</a> for the first time ever, something economists have warned could <a href="https://markets.businessinsider.com/news/bonds/us-debt-economy-outlook-government-spending-deficit-bond-market-treasuries-2023-9">blow up into a bigger problem</a> in the future.

America's $1 trillion credit card bill really isn't as bad as it seems

Best Business Credit Cards of January 2024

<ul class="summary-list"><li>The average American household spends at least $475 a month on groceries.</li><li>40 million Americans are food insecure and SNAP benefits often don't provide enough financial help.</li></ul>Mary Dacus, 69, fills her basket at Ruler Foods <a target="_blank" href="https://www.businessinsider.com/boomer-couple-lives-social-security-snap-no-retirement-savings-2024-6">with the essentials</a>.Three cans of SpaghettiOs for $1 each, a dozen eggs for $2.99, a half gallon of milk for $2.59. She adds bread, soup, potatoes, chili mix, graham crackers, cereal bars, clementines, toilet paper, some frozen vegetables, and canned chicken — the fresh stuff is expensive.It comes to $83.02.Dacus goes shopping near her home in Robinson, Illinois — a city 200 miles south of Chicago — on the fourth Wednesday of every month after her husband Stephen cashes his <a target="_blank" href="https://www.businessinsider.com/personal-finance/what-is-social-security">Social Security check</a>. She hopes the food will last them a full 30 days, but she inevitably has to stop at Walmart a few times to fill in the gaps.Granola for $5.34, bell peppers for $2.88, two bottles of butter pecan coffee creamer for $7.94, and a new vacuum bag for $8.77. That's an additional $53.39.Dacus and her husband have to stick to a tight budget: their household only receives $23 a month from <a target="_blank" href="https://www.businessinsider.com/snap-benefits-eating-less-skipping-meals-pandemic-funding-cut-2023-9">SNAP.</a> They must rely on their combined $2,140 Social Security income for the rest and any other expenses they have since they're both retired. The average American household spends $475 a month on groceries plus $303 on restaurants and takeout, according to the latest available <a target="_blank" rel="noreferrer noopener nofollow" href="https://www.bls.gov/opub/reports/consumer-expenditures/2022/home.htm">US Bureau of Labor Statistics report</a> on consumer expenditures in 2022.There are <a target="_blank" href="https://www.ers.usda.gov/topics/food-nutrition-assistance/food-security-in-the-u-s/key-statistics-graphics/#:~:text=In%202022%3A,with%20adults%2C%20were%20food%20insecure.">over 40 million Americans</a> experiencing food insecurity. SNAP provides relief for many households living paycheck to paycheck. But some struggling families, like Dacus', don't receive enough help, or their income is considered too high <a target="_blank" href="https://www.businessinsider.com/snap-alice-food-stamps-hunger-government-assitance-free-meals-2024-5">to receive any help at all</a>. ALICEs — people who are asset-limited, income-constrained, employed — <a target="_blank" href="https://www.businessinsider.com/alice-living-paycheck-to-paycheck-without-government-assistance-snap-medicaid-2024-5#:~:text=Many%20live%20paycheck%20to%20paycheck,electricity%20bill%20or%20their%20rent.">feel especially left behind</a> by food assistance programs.According to the <a target="_blank" href="https://www.pewresearch.org/short-reads/2023/07/19/what-the-data-says-about-food-stamps-in-the-u-s/">Pew Research Center</a>, about 13% of Americans, or 22 million households, are enrolled in government food benefits.Anything helps, Dacus said, but her SNAP allocation "barely covers one meal.""The man called me and told me, 'Oh, we're going to get you $23 a month.' And I laughed," she said. "That's pitiful. That's really pitiful."<h2 id="33dd40c8-3f23-40e4-beb7-fb5624258084">With limited SNAP dollars, Dacus relies on food pantries</h2>Dacus is a good cook — she used to love making pot roast when she could afford it — and can usually make a meal out of whatever miscellaneous ingredients she and Stephen have in their cupboard. She typically makes crockpot meals, casseroles, or other dishes that she can stretch for more than one meal. But $23 a month in food benefits <a target="_blank" href="https://www.businessinsider.com/why-youre-still-spending-much-of-your-budget-on-food-2024-2">isn't even close</a> to affording what they need to eat.Often, Dacus said a full month of food and household products can run them about $200, plus an additional $30 to $50 a week when they run out of things. They struggle with their other <a target="_blank" href="https://www.businessinsider.com/middle-class-americans-earning-above-poverty-live-paycheck-to-paycheck-2024-4">household bills</a>, are in nearly $10,000 in credit card debt, and have <a target="_blank" href="https://www.businessinsider.com/college-adjunct-professor-salary-not-enough-live-student-loan-debt-2024-6">drained their savings</a> in order to pay for food and healthcare."We've used our credit cards within the last three and a half years to buy groceries and things that we needed," she said, adding that she and Stephen's low credit score has now made it difficult to qualify for housing and car payments.To avoid going hungry, Dacus said she has to rely on <a target="_blank" href="https://www.businessinsider.com/americans-lose-food-stamps-snap-benefits-banks-bracing-high-need-2023-2">local food pantries</a>. They pick up canned goods and packaged food. But there aren't many food pantries near her house, and the ones in driving distance are open for limited hours. Even when they can go to the pantry, Dacus said the food is unhealthy and sometimes spoiled.<h2 id="51edbf87-5f70-43e3-a43f-f07eaa9fc336">SNAP benefits don't always align with household needs</h2>America's SNAP program provides low-income households with money to grocery shop, and the qualifying criteria is based on the <a target="_blank" href="https://www.businessinsider.com/middle-class-americans-earning-above-poverty-struggles-afford-food-medicine-2024-4#:~:text=The%20federal%20poverty%20line%20is,ALICEs%20live%20paycheck%20to%20paycheck.">federal poverty line</a>. The allocation can also be affected by earned-income taxes, and the number of children or older adults in a household. What's more, the costs of groceries can vary widely based on a person's location.An individual with a monthly gross income lower than $1,580 can receive a maximum of $291 monthly from SNAP, and a couple with a monthly income lower than $2,137 can receive a maximum of $535, according to the <a target="_blank" href="https://fns-prod.azureedge.us/sites/default/files/resource-files/FY24-SNAP-COLA-Memo.pdf#page=2">US Department of Agriculture</a>. Yet, many households like Dacus' don't receive the maximum because their income isn't low enough.There are also limitations on how SNAP dollars can be used. The money covers basic food products like milk and bread, but it cannot be used to purchase dish soap, toilet paper, laundry detergent, vitamins, feminine products, over-the-counter medicine, or pet food.Groceries are just part of the $38,268 the average couple in Robinson, Illinois needs to survive every year, which includes the cost of housing, utilities, healthcare, transportation, and unexpected expenses, <a target="_blank" href="https://www.unitedforalice.org/household-budgets/illinois">according to United Way</a>. For a family with two school-age children, that number becomes $61,632. This budget doesn't leave any room to build savings or prepare for retirement.It's also <a target="_blank" href="https://www.businessinsider.com/government-assistance-food-stamps-snap-doesnt-help-low-income-dinks-2024-5">more difficult for childfree adults</a>, or adults whose children are no longer minors, to qualify for food assistance. Dacus said she and her husband have to rely on SNAP and food pantries because she can't access other programs like <a target="_blank" href="https://www.businessinsider.com/gop-wants-cut-wic-low-income-baby-food-parents-2023-7">WIC</a> (Special Supplemental Nutrition Program for Women, Infants, and Children), <a target="_blank" href="https://www.businessinsider.com/enhanced-child-tax-credit-parents-passes-house-business-tax-relief-2024-1">the child tax credit</a>, and parts of the earned-income tax credit."We don't get ahead at all," Dacus said. "We take two steps forward and three back."Are you experiencing food insecurity? Are you open to sharing your experience with SNAP or grocery shopping? If so, reach out to this reporter at <a target="_blank" href="mailto:allisonkelly@businessinsider.com">allisonkelly@businessinsider.com</a>.

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