A recent survey conducted by Debt.com has revealed that a significant number of Americans are maxing out their credit cards due to inflation and rising prices. Approximately 45% of Americans reported that they have turned to credit cards to cover basic needs amid increasing costs. Additionally, 9% of respondents said they had to resort to credit cards for financial emergencies, with 35% admitting to maxing out their cards in recent years. The survey also found that 85% of those who maxed out their credit cards did so because of inflation. Furthermore, a notable 22% of Americans now owe between $10,000 to $20,000 in credit card debt, with 5% having accumulated more than $30,000 in debt.
In response to the Consumer Financial Protection Bureau’s rule capping credit card late fees at $8, the House Financial Services Committee has advanced legislation to repeal the rule. The measure, introduced by Rep. Andy Barr, would utilize the Congressional Review Act to overturn the CFPB’s regulation and prohibit the agency from proposing a similar rule in the future. Despite strong support for the rule from President Joe Biden, the Democratic-controlled Senate is unlikely to approve any measure that overturns the credit card late fee caps. However, some Democrats have supported previous legislation aimed at blocking regulations from the CFPB and other agencies.
A survey conducted by The Motley Fool Ascent has revealed that Americans prioritize credit card features such as rewards, interest rates, and perks over their level of trust in credit card issuers. Cash back credit cards were found to be the most popular among Americans, with Capital One being the most common credit card issuer. The survey also highlighted generational differences, with Gen Z individuals more likely to prioritize credit cards with sign-up offer bonuses, while baby boomers tend to prefer store or brand-specific credit cards.
The growing influence of social media and Buy Now, Pay Later apps has led to increased overspending among young consumers, particularly within the Gen Z age group. A Lending Tree survey found that 62% of Gen Z-ers feel pressured to spend money to keep up with peers, compared to the national average of 32%. Data released by Credit Karma showed that Gen Z-ers have accumulated more credit card debt than millennials, with social media playing a significant role in influencing impulsive purchases. Additionally, a Bankrate survey revealed that social media users spent an average of $754 on impulse purchases after seeing advertisements online, with Gen Z respondents being the most likely to make such purchases.
As gift card scams continue to cost consumers millions of dollars, lawmakers are pressuring businesses to take action against fraudsters. Scammers exploit gift cards by obtaining sensitive information such as bar codes and PIN numbers, draining the cards before consumers have a chance to use them. In 2023, gift card-related fraud accounted for $217 million of the $10 billion lost to scams nationwide, according to FTC data. State attorneys general and legislatures are implementing consumer alerts and urging retailers to enhance packaging for gift cards. Despite pushback from retailers and card manufacturers, efforts are underway to combat gift card scams and protect consumers from financial losses.
Klarna, a Swedish fintech company, has launched its credit card in the United States, entering the competitive market alongside other industry players like Apple and Affirm. The Klarna credit card offers various benefits, including up to 10% cash back on selected merchants and compatibility with Google and Apple Pay. Users can also access deals on planned purchases through Klarna’s AI assistant. The no-annual-fee card aims to expand Klarna’s market presence and appeal to U.S. consumers looking for flexible payment options. Furthermore, Citi and Chase have announced plans to cover higher Global Entry fees for premium cardholders, following an increase in fees imposed by U.S. Customs and Border Protection. Despite the fee hike, credit card companies continue to offer perks and benefits to attract and retain customers.
