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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>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.

Best Credit Cards for Military Members of 2024

The offers and details on this page may have updated or changed since the time of publication. See our article on <a href="https://www.businessinsider.com/how-credit-cards-save-me-thousands-on-travel-2024-8" target="_blank">Business Insider</a> for current information.<ul class="summary-list"><li>I'm a frequent traveler spending $1,300 a year on credit card fees to get great perks. </li><li><a href="https://www.businessinsider.com/personal-finance/american-express-platinum-credit-card-review">The Platinum Card® from American Express</a> saves me money with its complimentary Priority Pass membership.</li></ul>I used to think that paying an annual fee for a credit card was a terrible idea and a waste of money. For years, I prided myself on using <a href="https://www.businessinsider.com/personal-finance/credit-cards/best-no-fee-credit-card">no-fee credit cards</a> that offered a small amount of <a href="https://www.businessinsider.com/personal-finance/credit-cards/best-cash-back-credit-cards">cash back</a> on purchases. But I changed my mind once I started traveling more and learning about the perks some credit cards offered.I dove in head first. This year I've spent about $1,300 on annual fees. Most of the fees are worth every penny and have easily paid for themselves, though there are some I'm not sure about. Here are my <a href="https://www.businessinsider.com/favorite-credit-card-perks-frequent-traveler-2024-7">favorite travel card perks</a>, plus a few I've enjoyed but would be OK losing. <h2>I love having airport-lounge access and travel upgrades</h2>My <a href="https://www.businessinsider.com/personal-finance/credit-cards/amex-business-platinum-card-review"></a><a href="https://www.businessinsider.com/personal-finance/credit-cards/amex-business-platinum-card-review">American Express Business Platinum</a> <a href="https://www.businessinsider.com/personal-finance/credit-cards/amex-business-platinum-card-review"></a>comes with a hard-to-swallow $695 annual fee, but the perks have more than outweighed the cost. For context, I'm a freelance writer and use this card for expenses associated with my business, but American Express offers a <a href="https://www.americanexpress.com/us/credit-cards/card/platinum/?s_stlnk=CS_Test_Plat_4.12.24&amp;utm_mcid=&amp;utm_source=google&amp;utm_medium=cpc&amp;utm_term=%2Bamerican+%2Bexpress+%2Bplatinum&amp;utm_cmpid=21211613033&amp;utm_adgid=142828790300&amp;utm_tgtid=kwd-383918391531&amp;utm_mt=p&amp;utm_adid=703411312682&amp;utm_dvc=c&amp;utm_ntwk=g&amp;utm_adpos=&amp;utm_plcmnt=&amp;utm_locphysid=9007537&amp;utm_locintid=&amp;utm_feeditemid=&amp;utm_devicemdl=&amp;utm_plcmnttgt=&amp;utm_programname=brandcps&amp;utm_cmp=Platinum&amp;utm_sl=&amp;gclid=CjwKCAjwnK60BhA9EiwAmpHZw0IzIjTZihCfICjEFqbYrlNo64dRJwmOPmozqwz45-NBNN3umc8DHxoCd4gQAvD_BwE&amp;eep=28810&amp;utm_misc=cardshop" target="_blank" rel="noopener">personal version</a> that's very similar.I've used this card's benefits to get <a href="https://www.businessinsider.com/personal-finance/credit-cards/clear-airport-security">CLEAR</a> and <a href="https://www.businessinsider.com/personal-finance/credit-cards/best-global-entry-tsa-precheck-credit-card">Global Entry</a>, both of which have helped me speed through security lines at airports. It got me an automatic upgrade to <a href="https://www.businessinsider.com/personal-finance/credit-cards/how-to-earn-redeem-hilton-honors-points">Hilton Honors</a> Gold elite status, which has scored me free breakfast and room upgrades throughout my travels. However, my favorite perk of this card is my free <a href="https://www.businessinsider.com/personal-finance/credit-cards/how-to-get-priority-pass-for-free">Priority Pass</a> membership. With it, I've gained access to several airport lounges for myself and up to two travel companions, usually my children.This benefit alone has saved me hundreds of dollars since I no longer have to buy pricey food at the airport — most lounges offer plenty of it for free. Plus, lounge access has made long travel days and layovers so much easier. I wish I had gotten this card sooner. <h2>Being able to avoid foreign transaction fees has saved me a lot of money</h2>The first credit card I applied for with an annual fee is the <a href="https://creditcards.chase.com/a1/24Q3/sapphire/dual?CELL=6D4C&amp;jp_cmp=cc/Sapphire+Preferred_Brand_Exact_Sapphire+Preferred_SEM_US_NA_Standard_NA/sea/p56274819573/Chase+Sapphire+Preferred&amp;gclsrc=aw.ds&amp;ds_rl=1253080&amp;gad_source=1&amp;gclid=CjwKCAjwnK60BhA9EiwAmpHZw2RFN6PLXS_Pd4E6N_kWGXSjbA1p81Z5g46aBhQkqNhsnB2L5vgYZhoC8Y4QAvD_BwE&amp;gclsrc=aw.ds" target="_blank" rel="noopener"></a><a href="https://www.businessinsider.com/personal-finance/chase-sapphire-preferred-card-review">Chase Sapphire Preferred® Card</a>, which has a $95 annual fee. Many of my cards charge up to 3% for every transaction made in a currency other than US dollars, but this one doesn't. <a href="https://www.businessinsider.com/personal-finance/credit-cards/what-is-foreign-transaction-fee">Foreign transaction fees</a> can add up quickly, even on a short trip. Because I take a couple of international trips a year, the $95 annual fee more than pays for itself. The <a href="https://www.businessinsider.com/personal-finance/chase-sapphire-preferred-card-review">Chase Sapphire Preferred® Card</a> also has other money-saving perks for travelers I like, including competitive <a href="https://www.businessinsider.com/personal-finance/travel-insurance/travel-insurance-vs-credit-card">travel insurance</a> and <a href="https://www.businessinsider.com/personal-finance/auto-insurance/what-is-rental-car-insurance">car-rental insurance</a> for trips charged to the card. Although my <a href="https://www.businessinsider.com/personal-finance/credit-cards/amex-business-platinum-card-review">Amex Business Platinum</a> also provides fee-free foreign transactions and travel insurance, American Express isn't as widely accepted internationally. I've had <a href="https://www.businessinsider.com/personal-finance/credit-cards/best-chase-card">Chase credit cards</a> accepted almost everywhere I've traveled so I will keep this one in my wallet. <h2>I paid several hundred dollars to get an Amex Gold, but I got points galore </h2><div type="image" title="The bar at the Delta One lounge with black high top chairs." height="3024" width="4032" msid="112720766" hostid="261" sizebytes="943274"></div>I applied for an <a href="https://creditcard.americanexpress.com/d/business-gold-card/?s_stlnk=23WelcomeOffer&amp;utm_mcid=&amp;utm_source=google&amp;utm_medium=cpc&amp;utm_term=%2Bamerican%20%2Bexpress%20%2Bbusiness%20%2Bgold&amp;utm_cmpid=21422559996&amp;utm_adgid=170920140424&amp;utm_tgtid=kwd-707750570877&amp;utm_mt=p&amp;utm_adid=695113361185&amp;utm_dvc=c&amp;utm_ntwk=g&amp;utm_plcmnt=&amp;utm_locphysid=9007537&amp;utm_locintid=&amp;utm_feeditemid=&amp;utm_devicemdl=&amp;utm_plcmnttgt=&amp;utm_ltpcid=CjwKCAjwnK60BhA9EiwAmpHZw-_dU_STCnbf2AlVEPaJelCH5fK1yVPArCw6-X9Tg9n8-NzLqCGoaxoCHHsQAvD_BwE&amp;utm_programname=brandproductspecific&amp;utm_cmp=GoldTermsSMB&amp;gclid=CjwKCAjwnK60BhA9EiwAmpHZw-_dU_STCnbf2AlVEPaJelCH5fK1yVPArCw6-X9Tg9n8-NzLqCGoaxoCHHsQAvD_BwE" target="_blank" rel="noopener"></a><a href="https://www.businessinsider.com/personal-finance/amex-business-gold-card-review">American Express® Business Gold Card</a> card when the company ran one of its rare promotions offering 150,000 points as a sign-up bonus. The card's $375 annual fee is high, but the generous sign-up bonus more than made up for it for me.I have several international trips planned this year, and I expect that the 150,000 points I plan to redeem for airline tickets will easily save me at least triple the annual fee. For example, a ticket on a flight I'm eyeing to New Delhi from Washington, DC, costs $1,488 and is 148,000 points.With this card, I also receive monthly statement credits — up to $20 a month — offsetting more than half of the annual fee I paid. However, it's a pain to keep track of earning the monthly credit, and the card's other benefits aren't that valuable to me.I probably won't keep this card for a second year since American Express offers a <a href="https://www.americanexpress.com/us/credit-cards/card/gold-card/?utm_mcid=&amp;utm_source=google&amp;utm_medium=cpc&amp;utm_term=%2Bamerican+%2Bexpress+%2Bgold&amp;utm_cmpid=21215159479&amp;utm_adgid=141451150545&amp;utm_tgtid=kwd-378783604257&amp;utm_mt=p&amp;utm_adid=688797561785&amp;utm_dvc=c&amp;utm_ntwk=g&amp;utm_adpos=&amp;utm_plcmnt=&amp;utm_locphysid=9007537&amp;utm_locintid=&amp;utm_feeditemid=&amp;utm_devicemdl=&amp;utm_plcmnttgt=&amp;utm_programname=brandcps&amp;utm_cmp=Gold&amp;utm_sl=&amp;gclid=CjwKCAjwnK60BhA9EiwAmpHZwwBO9FJLMLIaV_rtDd4b73g6qijaQ1295HWyR5scWwkpNerBJ-G0XxoCYB4QAvD_BwE&amp;eep=28810&amp;utm_misc=cardshop" target="_blank" rel="noopener">personal version of it</a> with similar perks and a lower annual fee.<h2>Priority boarding has been nice, but not quite worth the price</h2>I'm a frequent flyer on United but have never accrued enough points to gain status with the airline. To get more perks on United, I applied for a <a href="https://fortune.com/recommends/credit-cards/united-explorer-card-review/" target="_blank" rel="noopener"></a><a href="https://www.businessinsider.com/personal-finance/united-explorer-card-review">United℠ Explorer Card</a> card, which doesn't charge an annual fee for the first year ($0 intro for the first year, then $95 annually in subsequent years). My favorite perk of this card is priority boarding. Combined with other perks like single-entry passes to <a href="https://www.businessinsider.com/see-inside-uniteds-new-41-million-polaris-lounge-washington-dulles-2022-3">United Club lounges</a> and free checked bags, I thought this card was a good value. However, I now get lounge access and credit for checked bags with my <a href="https://www.businessinsider.com/personal-finance/credit-cards/amex-business-platinum-card-review">Amex Business Platinum</a>, and I don't think priority boarding is valuable enough to make up for the annual fee. I would also rather earn points that can be transferred to several airlines and hotels rather than being locked into United. I plan on canceling this card when the next annual fee comes due, but I might reapply if I find that I miss priority boarding a lot.

I spend $1,300 a year on credit-card fees to get big travel perks. Here are ones I swear by and which I won't pay for again.

Best Business Credit Cards of January 2024

The offers and details on this page may have updated or changed since the time of publication. See our article on <a href="https://www.businessinsider.com/chase-united-explorer-card-perks-annual-fee-worth-it-2024-7" target="_blank">Business Insider</a> for current information.<ul class="summary-list"><li>As a <a href="https://www.businessinsider.com/best-us-states-to-visit-according-to-frequent-traveler">frequent traveler</a>, I rely on travel credit cards to save money and earn rewards. </li><li>I love using my Chase United℠ Explorer Card, which comes with a $0 intro for the first year, then $95 annual fee.</li></ul>Travel credit cards are hotter than ever, with <a href="https://www.nerdwallet.com/article/travel/how-the-41-of-americans-with-a-travel-credit-card-can-boost-rewards" target="_blank" rel="noopener">over 41% of Americans</a> having a card that provides travel rewards. However, with many cards offering lounge access, statement credits, and travel insurance, some cards' annual fees have climbed to nearly $700 a year. As a frequent traveler, I have and use a <a href="https://www.businessinsider.com/american-express-platinum-card-perks-annual-fee-worth-it-2024-5">credit card with a high annual fee</a>. However, I've paired it with the United℠ Explorer Card, which has a much lower annual fee of $0 intro for the first year, then $95.This card, included in Business Insider's guide to the <a href="https://www.businessinsider.com/personal-finance/best-airline-credit-cards">best airline credit cards</a>, offers a surprisingly robust number of benefits, from priority boarding on United flights to statement credits that can be redeemed for a DashPass membership.Here are some of the perks I get from using my <a href="https://www.businessinsider.com/personal-finance/united-explorer-card-review">United℠ Explorer Card</a>.<h2>As a United℠ Explorer Card cardholder, I always get priority boarding</h2>Some travelers may not care which boarding group they're in, but I am not one of them. Whether I'm <a href="https://www.businessinsider.com/how-i-pack-only-carry-on-month-long-trip-packing-tips-2023">traveling with a carry-on</a> and want to ensure I have space in the overhead compartment or just want to get myself situated and comfortable before a flight, boarding in a priority group is important to me. As a United℠ Explorer Card cardholder, I am always in a priority-boarding group. <h2>Every four years, I get a statement credit of up to $100 for TSA PreCheck, Global Entry, or NEXUS </h2><div type="image" title="Signs on flags in an airport that say &quot;TSA Precheck&quot; and &quot;Enter here,&quot; in front of roped lines." height="750" width="1000" msid="111815695" hostid="261" sizebytes="66222"></div>Although traveling can be a test of patience, I've found that having an expedited security process can make the experience much smoother. That's why I love that my United℠ Explorer Card reimburses me for services like TSA PreCheck, Global Entry, and NEXUS.I've traveled with <a href="https://www.insider.com/why-get-tsa-precheck-2018-11">TSA PreCheck</a> for years, and recently became a Global Entry member (which includes PreCheck). Both programs are valid for five years, with PreCheck costing $78 to apply and Global Entry costing $100. NEXUS, which allows for expedited entry between the US and Canada, is also valid for five years and costs $50 to apply. If I charge the application fee for one of these services to my United℠ Explorer Card, I get reimbursed on my statement once every four years, effectively making the membership free. Several other premium <a href="https://www.businessinsider.com/personal-finance/best-global-entry-tsa-precheck-credit-card">credit cards also offer Global Entry and TSA PreCheck</a> statement credits. <h2>The first checked bag is free for me and a companion on my reservation</h2>Although many people aim to travel using only a carry-on, it's not always possible to do so. <a href="https://www.cbsnews.com/news/united-airlines-raises-baggage-fees-2024/" target="_blank" rel="noopener">Checked bag fees have only increased</a>, with one bag costing $40 to check on United flights.However, if you're a United℠ Explorer Card cardholder, you and your companion (on the same reservation) get your first bags checked for free when purchasing flights using the card. <h2>I get two United Club one-time-use lounge passes a year</h2><div type="image" title="Emily sitting in a brown-leather chair, holding a glass of white wine with a plate of food on a table next to her. The walls are glass and see-through." height="2268" width="3023" msid="111815698" hostid="261" sizebytes="777214"></div><a href="https://www.businessinsider.com/personal-finance/credit-cards-with-airport-lounge-access">Airport lounges</a> are popping up everywhere, generally as a benefit of a high-annual-fee credit card or for those flying in first or business classes. But if you want the benefit of a lounge without high spending, the United℠ Explorer Card includes two one-time lounge passes a year for United Club use, which typically cost $59 apiece.I've used my one-time passes when I have a long layover or a delayed flight to access a United Club for complimentary food, drinks, and a quiet place to wait for my flight. This benefit alone exceeds the entire cost of the card's annual fee.<h2>The card comes with lots of added travel protections</h2>For a card with a low annual fee, the United℠ Explorer Card packs a punch with <a href="https://www.businessinsider.com/personal-finance/travel-insurance/travel-insurance-vs-credit-card">travel insurance</a> protections. This card includes lost luggage reimbursement (up to $3,000 per passenger), trip delay reimbursement (after 12 hours of delay, up to $500 per ticket for unreimbursed expenses), baggage delay insurance (after 6 hours of delay, up to $100 for three days), and trip cancellation or interruption insurance (up to $1,500 per person).When booking my travel with the United℠ Explorer Card, these perks allow me to travel with much more peace of mind. In fact, I've personally used both the baggage delay and trip delay insurance without any issues. <h2>I receive 25% back on in-flight purchases</h2><div type="image" title="A cookie in a package, a small bottle of white wine, a blue cup, and a napkin sit on a tray on a plane." height="2274" width="3024" msid="111815696" hostid="261" sizebytes="410306"></div>Another benefit I really love is that United℠ Explorer Card cardholders receive 25% back on in-flight purchases on United flights. This includes food, alcoholic beverages, and even WiFi purchases. Since I travel often, this perk makes a huge difference for me. <h2>The card also comes with a complimentary one-year membership to DashPass </h2>The <a href="https://www.businessinsider.com/personal-finance/united-explorer-card-review">United℠ Explorer Card</a> offers one year of complimentary DashPass membership, which can be used on DoorDash and Caviar. The benefit, normally $10 a month, offers various benefits like $0 delivery fees on orders that meet the minimum spend. If you regularly have <a href="https://www.businessinsider.com/foods-to-never-get-delivered-from-restaurants-according-to-chef-2022-6">food delivered</a> at home or while traveling, these fees add up, making the membership a great money-saving benefit. <h2>I also get primary rental car insurance</h2>I often rent cars during my travels, and having as much coverage as possible when driving them is important to me. The United℠ Explorer Card includes primary rental car insurance coverage. This means that I'm eligible for reimbursement up to the vehicle's actual cash value for theft and collision damage for most rental cars within the US and abroad. With primary coverage, I also don't have to first file a claim with my own auto insurance company.

I love using my Chase United Explorer card with a low annual fee. I get tons of travel perks, plus credits for DoorDash and more.

The Best Credit Cards With Primary Rental Car Insurance of 2024

<ul class="summary-list"><li>There's a new card from OTH Network that influencers are swiping to redeem products and services.</li><li>The influencer-focused fintech platform uses AI to match brands and creators.</li></ul>There's a hot new card influencers are swiping at restaurants and retailers to redeem products and services.The card is offered by OTH ("on the house") Network, an <a target="_blank" class="" href="https://www.businessinsider.com/influencer-fintech-channelmeter-launches-youtuber-early-payment-app-2020-7">influencer-focused fintech platform</a> that uses artificial intelligence to monitor content created for brands and match creators with marketing deals. Influencers use the OTH Network app to gather offers from local businesses. Then, after creating <a target="_blank" class="" href="https://www.businessinsider.com/how-to-reach-out-to-brands-influencer-collaboration-post-email">sponsored content</a>, they can spend the payment added to their account in person at the business.The closed platform has a waiting list, which influencers must apply for by filling out questions like <a target="_blank" class="" href="https://www.businessinsider.com/how-much-influencers-charge-sponsored-posts-ai-other-takeaways-data-2024-5">follower count, content category</a>, and location. Once accepted, the creator will receive a black and gold card (like a loyalty card) to use in person to redeem products and services.For example, Sushi Bar in Miami, Flowrbombr Skincare in Los Angeles, and Footnanny Nail Spa in Beverly Hills have all partnered with OTH for <a target="_blank" class="" href="https://www.businessinsider.com/influencer-marketing-is-booming-as-brands-take-creators-more-seriously-2024-7">influencer campaigns</a>.Cofounders Maximiliaan Van Kuyk and Ketan Rahangdale started the company in 2020 and, in September, raised <a target="_blank" class="" href="https://www.businessinsider.com/creator-economy-startups-raised-vc-money-in-bear-market-2023-11">VC funding</a> from Innovate Ventures, according to Pitchbook.In some ways, OTH is part of a familiar practice in the <a target="_blank" class="" href="https://www.businessinsider.com/top-ways-to-make-money-as-content-creator">influencer world</a>: gifting. Brands will often send influencers free products or services with the hope or expectation that they will post about it on social media. But OTH is putting a new twist on this practice by looking to streamline the process using an AI-powered app and giving it an exclusive feel with a physical card."We see influencers opening up like 10 packages a day and putting it on social," Van Kuyk said, referring to traditional influencer gifting practices. "But it's super inorganic."Van Kuyk told Business Insider that the platform currently has over 3,000 creators and over 90,000 global creator applications. In the US, it's available to creators in cities including Miami, LA, Chicago, Las Vegas, and New York, with plans to expand. The company started in hospitality and then expanded into wellness, beauty, and fashion."We are being extremely diligent on only letting in the top creators in cities we are operating in," Van Kuyk said.Influencers who use the platform include Roz Model (15 million Instagram followers), Montana Tucker (3.2 million Instagram followers), Kat Graham (9.7 million Instagram followers), and Matt Staffanina (3.7 million Instagram followers).Creators must have at least 10,000 Instagram followers to be considered, and for now, OTH rarely accepts creators <a target="_blank" class="" href="https://www.businessinsider.com/micro-influencer-campaigns-decline-marketers-turn-to-big-stars-2024-10">under 100,000 followers</a>, Van Kuyk said. But he added that the platform plans to expand into micro influencer categories."We have made some exceptions to that, just because some merchants enjoy that, but for the most part that's where we've been focusing," he said. "We 100% acknowledge that space and we will be moving into that space over time. Maybe we will release a micro influencer strategy product that will be a little bit separate and have different rules around it. But, as a startup, we have to stay focused on what our strengths are."<h2 id="7bd36f65-955d-4320-957f-3b0cd78e7e3d">How OTH Network structures its partnerships</h2>Typically, influencers on the platform are asked to create two pieces of content, like an Instagram story or reel, or TikTok, that features themselves and the restaurant or product. They upload the content to the OTH app, and the platform's AI technology checks the quality of the content.Once the content is approved, the influencer can post it, and the business can then use that content on their own marketing channels.Van Kuyk said the platform makes money by charging the merchants, but declined to expand on its business model and fee structure.Using AI and other third-party systems, OTH checks its applicants for bots, fake followers, and overall engagement. Brands care about a creator's audience, brand safety, and if the creator fits the right aesthetic, Van Kuyk said.Once accepted, the influencer is asked to jump on a call, which is part of an interview process with the company's creator team.OTH is not partnered with a bank. Instead, the card works more like a reimbursement or loyalty card, and each business uses the app to tap the card and redeem the influencer's credit."That is a direction that we're planning on going in, to actually have that be a real Visa or Mastercard that the influencers are banking with," Van Kuyk said. "We have a serious tech team in-house that is constantly building and upgrading these things. It's not just an agency with an app in front of it."

Influencers are swiping a new black card at restaurants, spas, and fitness studios

The offers and details on this page may have updated or changed since the time of publication. See our article on <a href="https://www.businessinsider.com/lower-credit-card-late-fees-limits-savings-us-economy-impact-2024-3" target="_blank">Business Insider</a> for current information.Our experts choose the best products and services to help make smart decisions with your money (<a href="https://www.businessinsider.com/personal-finance/personal-finance-editorial-standards" class="not-content-link" target="_blank">here's how</a>). In some cases, we receive a commission from <a href="https://www.businessinsider.com/personal-finance/our-partners" class="not-content-link" target="_blank">our partners</a>; however, our opinions are our own. Terms apply to offers listed on this page.<ul class="summary-list"><li>The Biden administration has limited credit card late fees to $8, a 75% reduction.</li><li>This change could add $2.7 billion to household expenditures annually, boosting the US economy.</li></ul>The Biden administration set a new limit on <a target="_blank" href="https://www.businessinsider.com/credit-card-interest-rates-late-fees-are-rising-recession-2023-11">credit card late fees</a>, and it could be worth billions to Americans, especially those in <a target="_blank" href="https://www.businessinsider.com/inflation-rate-hurting-poorest-workers-food-shelter-basic-needs-2023-10">lower income brackets</a>.On March 5, the Consumer Financial Protection Bureau finalized a new rule to <a target="_blank" href="https://markets.businessinsider.com/news/interestrates/cfpb-caps-credit-card-late-fees-at-8-1033134302">limit all credit card late fees</a> to $8 from $32 for first violations and $41 for subsequent violations. This comes as credit interest charges and fees are soaring, <a target="_blank" href="https://www.businessinsider.com/credit-card-interest-rates-late-fees-are-rising-recession-2023-11">costing Americans more than $1,100 each year</a>, and leading to record levels of credit card debt.A new economic impact study provided to Business Insider by IMPLAN, an economic software and analysis company, showed that lowering the limit on credit card late fees would add more than $2.7 billion to household expenditures annually. The study also projected a $3.6 billion increase in US GDP and support for nearly 34,000 jobs annually.This new limit was part of the Biden administration's crackdown on "<a target="_blank" href="https://www.businessinsider.com/americans-could-save-billions-slash-credit-card-late-fees-cfpb-2023-2">junk fees</a>," which are fees that can confuse consumers because they are not obvious upfront.The CFPB estimated that credit card late fees cost Americans about $12 billion each year and that the new rule <a target="_blank" href="https://www.businessinsider.com/americans-could-save-billions-slash-credit-card-late-fees-cfpb-2023-2">could save them up to $9 billion per year. </a>About 45 million people are charged late fees annually, and that group could save up to $220 a year, according to the CFPB.<a target="_blank" rel=" nofollow" href="https://www.newyorkfed.org/medialibrary/interactives/householdcredit/data/pdf/HHDC_2023Q4">According to the Federal Reserve Bank</a>, more than 6% of credit card balances are in serious delinquency — behind by 90 days or more on payments — more than double the rate seen two years ago.There are concerns from opponents of the limit that credit card companies will attempt to compensate for <a target="_blank" rel=" nofollow" href="https://www.wsj.com/finance/regulation/credit-cards-could-swipe-department-stores-profits-bfccb82f">lost profits</a> by raising costs for all users. <a target="_blank" href="https://dailycaller.com/2024/02/28/ginn-biden-admin-junk-fees-american-bankers-association-late-fees/">Economist Vance Ginn</a> argued in a column for The Daily Caller in February that this could ultimately hurt small businesses and low-income households if credit companies limit who can get credit.<div type="image" title="Debts in serious delinquency." height="1336" width="1892" msid="108300963" hostid="261" sizebytes="112286"></div>A <a target="_blank" href="https://files.consumerfinance.gov/f/documents/cfpb_credit-card-late-fees_report_2022-03.pdf">study by the CFPB</a> published in 2022 showed that credit card late fees are disproportionally collected from people in low-income neighborhoods.<h2>Some industries will benefit more than others</h2>The benefits go beyond the typical consumer. The food, medical, and real estate industries will also see a positive impact, per the study.The food industry, including restaurants and retail stores, is expected to receive about $447 million in economic impact. More money back in the pockets of Americans would be expected to first go to immediate needs, such as food. The ripple effect extends beyond food.According to Jenny Thorvaldson, IMPLAN's chief economist and data officer, employment services, such as temporary staffing and recruitment services, are also expected to be economically boosted. If there's an increased demand in the food industry, then those businesses will need to expand their teams."Given the tight labor market and additional household spending on those services, those businesses will need to staff up or increase current staff hours," Thorvaldson added.<div type="image" title="A server delivers food and a beer in a bar." height="1643" width="2500" msid="108300964" hostid="261" sizebytes="148070"></div>Reduced credit card late fees would also be worth about $414 million to the real estate industry. If homeowners had more money to spend, they would start by making repairs, down payments, and mortgage payments on top of typical expenditures.Medical services, such as hospitals, nursing care facilities, and physician offices, would also gain about $550 million.According to Thorvaldson, the boost in medical expenditures is tied to people being less inclined to put off procedures and treatments they might consider optional."This is backed up by data that showed that people spent less on healthcare during the pandemic when they delayed care or went without," she added.According to the <a target="_blank" href="https://www.cdc.gov/mmwr/volumes/69/wr/mm6936a4.htm">Centers for Disease Control and Prevention</a>, about 40% of American adults reported avoiding medical care early in the pandemic.<h2>A drop in the bucket of credit card costs</h2><a target="_blank" rel="" 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. Late fees are just a small portion of the total amount that Americans are charged for using credit cards each year. If Americans saved $9 billion, based on the CFPB estimate, that would still leave about <a target="_blank" href="https://www.businessinsider.com/credit-card-interest-rates-late-fees-are-rising-recession-2023-11">$155 billion in interest and other fees</a>.<a target="_blank" href="https://www.businessinsider.com/credit-card-interest-rates-late-fees-are-rising-recession-2023-11">Interest and other credit card fees</a> cost consumers more than $1,100 a year and are still growing. As a result, more people are finding themselves in holes they are struggling to escape.According to data provided to Business Insider by <a target="_blank" rel=" nofollow" href="https://www.moneymanagement.org/">Money Management International</a>, a nonprofit credit counseling agency, Americans who sought debt counseling soared to record levels in January after the holidays.<div type="image" title="Number of people seeking debt counseling and average volume of debt." height="767" width="1079" msid="108300965" hostid="261" sizebytes="39970"></div>The <a target="_blank" href="https://www.businessinsider.com/credit-card-debt-interest-rates-consolidation-economy-recession-soft-landing-2024-2">credit card crisis</a> Americans are now facing will weigh on the <a target="_blank" href="https://www.businessinsider.com/recession-outlook-economy-consumer-spending-gone-2023-9">US economy</a> in the foreseeable future, but capping late fees could be a bit of relief, even if it is a small one.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>.

Biden's change to credit card fees could be worth nearly $3 billion to American consumers

Southwest Rapid Rewards Plus Credit Card Review 2023

Good news! Some of those annoying fees on your credit card may soon be getting smaller. Bad news! Banks and credit-card companies are almost certainly trying to figure out where else they squeeze money out of you.The Consumer Financial Protection Bureau announced last month that it had finalized a rule <a target="_blank" href="https://www.businessinsider.com/lower-credit-card-late-fees-limits-savings-us-economy-impact-2024-3">capping credit-card late fees at $8</a> for the first violation, cutting them down from the typical $32. Later that month, Mastercard and Visa <a target="_blank" href="https://www.businessinsider.com/personal-finance/visa-mastercard-swipe-fees-premium-credit-cards-2024-3">reached a $30 billion settlement</a> with US merchants agreeing to cap credit-card interchange fees — fees charged to retailers every time you swipe your card at their stores — for a handful of years.Much of the industry's reaction to the late-fees limit has been of the sky-is-falling variety, with the Bank Policy Institute, an advocacy group, declaring that such charges are "essential to efficient functioning of the market." The response to the interchange-fee settlement has been a bit more muted: The Electronic Payments Coalition, which represents Visa, Mastercard, and other credit-card companies, said it was OK with the swipe-fees cap. This sanguine approach, however, is likely in no small part because the agreement is much less aggressive than <a target="_blank" href="https://www.businessinsider.com/credit-cards-congress-competition-act-rewards-wipe-out-southwest-2023-10">legislation floating around in Congress</a>. Taken together, it's clear that many companies in the credit-card business would rather not be dealing with this situation.For consumers, the changes could be a decent deal. By the CFPB's calculation, late fees cost American families $14 billion a year, and it says the rule will save people some $10 billion annually. The swipe-fee cap will save merchants some money for a while, which could, in theory, be passed on to their customers, though it's unclear how much that will happen in practice. But there's good reason to think that, in the long run, these changes may not be an unambiguous win for <a target="_blank" href="https://www.businessinsider.com/credit-card-debt-interest-rates-consolidation-economy-recession-soft-landing-2024-2">credit-card customers</a>: Financial firms are very good at getting money out of people. There are all sorts of levers card issuers can and will pull to try to recuperate any lost revenue streams elsewhere. Where one door closes, a window opens — one many consumers may be surprised to see on their next credit-card statement."Banks will always be able to find other places to recoup revenue for things like this," Matt Schulz, the chief credit analyst at LendingTree, told me. "I would imagine that we will see other fees increase over the next little while."In the wake of the Visa/Mastercard settlement, analysts at UBS wrote in a note to investors that lost revenue due to caps on credit-card late fees and swipe fees, as well as impending changes to lower debit-card swipe fees, would send companies such as JPMorgan Chase, American Express, and Synchrony Financial looking for offsets elsewhere. There are a number of areas financial-services firms can turn to so they can make that money back, they said, including <a target="_blank" href="https://www.businessinsider.com/personal-finance/average-credit-card-interest-rate">charging more interest</a> and layering in various additional fees on items such as getting printed statements. They also said they thought there would be more fee-based card products, as in cards with annual fees."As the economics evolve, we would not expect the banks/card issuers to sit idle," the analysts wrote.Mark Elliot, the chief customer officer at LendingClub and a banking-industry veteran, noted that <a target="_blank" href="https://www.businessinsider.com/credit-card-interest-rates-late-fees-are-rising-recession-2023-11">annual interest rates for credit-card debt </a>are extra high right now, which could make it harder for companies to ratchet them up even further, though not impossible."We've seen a lot of research that most customers are not even as aware of what the rate is on their card as they probably should be, so the card companies could increase that," he said.Companies could look to <a target="_blank" href="https://www.businessinsider.com/visa-mastercard-merchants-agreement-impacts-credit-cards-reward-programs-2024-3?utm_source=Iterable&amp;utm_medium=email&amp;utm_campaign=campaign_Insider%20Today,%20March%2027,%202024">downgrade credit-card rewards</a>, which would save them money by not having to pay them out, though everyone is a little hesitant to alienate rewards customers. There are other places where banks and credit-card companies can look to <a target="_blank" href="https://www.businessinsider.com/personal-finance-credit-card-interest-rates-decide-whether-keep-card-2023-10">pay for rewards</a> like hotel points, miles, and cash back, such as upping foreign transaction fees or transfer fees or drawing from elsewhere. The Visa/Mastercard settlement allows retailers to add a surcharge for people with fancier rewards cards, which often come with higher swipe fees, but it's not clear how many merchants will do that. They don't want to drive away customers, especially more affluent, higher spenders, which rewards-card holders tend to be."Most merchants don't want to put themselves in the position of being the bad-guy tax collector on Visa and Mastercard's behalf," Doug Kantor, the general counsel at the National Association of Convenience Stores, said.According to the Merchants Payments Coalition, Mastercard is now <a target="_blank" href="https://news.bloomberglaw.com/daily-labor-report/mastercard-still-raising-some-fees-on-retailers-after-settlement">planning to increase</a> different credit card fees soon, it's "network assessment" fee.Banks and credit-card issuers have already been discussing in earnings calls their plans for what to do on fee clampdowns. With regard to the late-fee cap, Citi's chief financial officer, Mark Mason, said in its January call that the bank was planning to make up the lost revenue with various "offsets and mitigants," though he didn't specify what those were. The same month, Capital One CEO Rich Fairbank said the CFPB rule, once implemented, would have a "significant impact" on its profits and losses in the near term but that the company could deploy "mitigating actions" to eventually counteract it. Of course, things do not have to be this way. Banks have financial incentives to make a public fuss whenever any revenue stream is threatened, though it's not clear how big of a threat this actually is to their business or just what magnitude of changes they would need to make up the revenue. Whatever the reality, if they yell loud enough that some regulatory or legislative change will destroy their business, it ups the chances that said change will be reversed or never go through in the first place. And, on a fundamental level, many financial firms <a target="_blank" href="https://www.levernews.com/the-lie-banks-use-to-protect-their-late-fee-profits/">don't need such high profits</a> to stay afloat in the first place, as much as their shareholders may demand them.How many levers companies like JPMorgan Chase and Capital One can pull may also depend on competitive factors, Ira Rheingold, the executive director of the National Association of Consumer Advocates, said. Companies do have to contend with one another in terms of what types of annual fees they can get away with or interest rates they can charge. "I think there are some fundamental incentives that will keep them from going too crazy," he said.The scenario does appear to be somewhat of a whack-a-mole situation — one fee is axed here, another fee appears over there. Amanda Jackson, the director of consumer campaigns at Americans for Financial Reform, said the only way to actually end this frustrating fee game was for the government to step in, as it's attempting to do with the late-fees limit, and set rules that apply to a wider swath of charges."We need regulations with true reforms that allow for billions to be saved," she said.So next time your credit-card bill lands at your door, you may want to take a closer look at it to see whether any surprise extra charges wound up in there — and to see what your interest rate is.<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.

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