Many people use credit cards to pay for everyday expenses. But if you’re not careful, you could pay more than necessary in credit card fees. A recent study found that American credit card users paid $130 billion in credit card fees and interest in 2022. Find out more and discover what you can do to avoid additional credit card fees.
Credit card late fees totaled $14.5 billion
The Consumer Financial Protection Bureau (CFPB) releases a biennial report on the state of the consumer credit card market. These reports provide valuable data to show how U.S. consumers use credit cards.
One factor the CFPB examines is how much consumers pay in additional fees on top of the amounts they charge to their credit cards. The most recent report showed that card users were charged $14.5 billion in credit card late fees in 2022. This figure is significantly higher than the $11.3 billion in late fees reported in 2021.
When credit card users pay their bills late, issuers charge late fees. According to the study, the average late fee for all consumers in 2022 was $32, up $1 from 2021. These fees can quickly add up, so paying your bill on time every month is essential.
It can be easy to forget to pay your bill when life gets busy. You can avoid this fate by enabling automatic payments through your credit card account. Doing this can save you money on fees. Plus, avoiding late payments is a good move for your credit score.
Other fees totaled over $10 billion
Consumers also pay a hefty amount of money on annual fees. Many credit card issuers impose yearly fees in exchange for the card benefits that are offered. Since many issuers have also increased these fees in recent years, consumers are paying more despite a smaller percentage of them needing to pay annual fees in 2022.
Annual fee volume has more than doubled from $3 billion in 2015 to $6.4 billion in 2022. If you pay an annual fee to use your card, ensure you’re maximizing its perks so your money is not going to waste. Annual fees can be worthwhile if you’re getting value from your cards. But for those who want to avoid a yearly fee, there are no annual fee credit cards available.
The fees don’t stop there. Other credit card fees, like balance transfer fees, cash advance fees, and return payment fees, totaled over $4 billion in 2022. Every fee adds up and impacts the wallets of consumers like you.
Consumers paid over $105 billion in credit card interest
Interest continues to take the lead of additional fees paid by credit card users. In 2022, U.S. credit card consumers spent more than $105 billion in credit card interest fees, which is significantly more than the $87.6 billion paid by consumers in 2021.
Credit card interest rates continued to increase throughout 2021 and 2022, resulting in more interest fees being charged and higher credit card bills for consumers. Since credit card interest is high-interest debt, these fees can quickly worsen a consumer’s personal finance situation.
Credit cards are convenient. Using them for everyday purchases and paying your entire balance in full is the best way to use them. You can use one of the best rewards credit cards to earn valuable rewards on your spending. But make sure you only charge what you can afford and pay your credit card bill in full. Otherwise, you’ll be charged interest. You don’t want a costly credit card debt problem.
Use credit cards with care
Credit cards make it easier to pay for everyday purchases, offer fraud protection, and can provide valuable perks and rewards. But make sure you’re taking steps to avoid unnecessary credit card fees like late fees and credit card interest charges. Otherwise, you’ll throw your hard-earned money away and make credit card issuers richer.
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