Do Your Credit Cards Measure Up?

New Study Shows Credit Card Fees and Rewards Are on the Rise

Do Your Credit Cards Measure Up?
February 11, 2016

You are exposed to countless credit card ads on TV and other media, but did you notice anything unusual about them? You do not hear much about rates, unless they are 0% introductory rates. You do, however, hear quite a bit about rewards programs. Credit card issuers are battling for market share based on increasing rewards, to the benefit of consumers — assuming consumers are savvy about their choices and investigate the tradeoffs that exist to make up for those rewards programs.

A recently published report by CardHub shows that average third-quarter credit card rewards are up across the board compared to the same period in 2014. Cash-back rewards increased by 2.04%, and miles/points rewards increased by 1.74%.

Credit card companies are not going to offer anything that does not make money for them in the long run, so it is important to look at the other terms and conditions and whether they fit well with your typical credit card use. For example, if you pay your credit card off regularly and never charge more than you can pay off monthly, you could care less what the interest rate is.

Don't forget to compare all the fee structures that may apply over and above the annual fee. For example, cash advance fees are a common counterbalance used by credit card companies.

Since the beginning of 2011, fees for cash advances have increased by around 60% with the average being the greater of 3.98% or $14.11 depending on the size of the withdrawal (although that represents a slight drop from the previous quarter). Annual fees are also on the rise, with an average increase of over 5% as compared to 2014, and average maximum late fees have increased over 4% to $35.61.

Balance transfer cards, or cards with introductory rates that are designed to consolidate debts or buy time to pay down large balances, are another battleground for issuers. Balance transfer cards may have different rates or times for new purchases as compared to transferred debts. Over the past year, the 0% balance transfer period increased by 3.7% while 0% periods on new purchases shortened by over 3.2%.

CardHub suggests that the above data means that issuers are competing more vigorously for consumers' existing debt while providing a disincentive to accumulate more debt. A more cynical view would suggest that card issuers are slowly shortening the 0% time on new purchases in order to recoup some of the revenue lost in offering increased rewards packages. Regardless of the credit card issuer's motivation, this means that a savvy consumer can take advantage of rewards programs that best fit their usage patterns.

The top complaint of credit card holders is billing issues, which consistently take up around 20% of the total complaints. For the third quarter, billing complaints took up just short of 23% of the total. Identity theft, fraud, and embezzlement issues came in second at almost 10.4%.

The CardHub report also compiled complaints by major issuers in order to create a satisfaction rating. Of the seventeen card issuers listed, the Navy Federal Credit Union had the highest customer satisfaction rating of 95 on a 100-point scale. The poorest performer was Synchrony with a satisfaction rating of 75%.

The takeaway message from the CardHub report is that shopping for the best credit card rewards programs can pay off, as long as you take the time to investigate properly the fees and satisfaction ratings. Don't just assume that you already have the best deal.

If you want more credit, check out MoneyTips’ list of credit card offers.


Photo ©iStock.com/rjmiz

  Conversation   |   12 Comments

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Steffanie | 02.11.16 @ 16:53
We check rates very closely when we look into a new credit card. We try to keep one around for emergency situations.
Irene | 02.11.16 @ 16:53
I have been getting so many credit card offers lately, some sound like good deals but I know it's bad to accept too many cards
Erin | 02.11.16 @ 16:53
We may need to start shopping around soon, although we're pretty satisfied with what we have now. This is good information to have on hand. Thanks!
brittany.martinez530 | 02.11.16 @ 16:54
I am really careful when it comes to the kind of cards I get. I only have one credit card currently.
Nancy | 02.11.16 @ 16:54
Bottom line is that these companies are in business to make money. It is our responsibility to check the fine print to find what is best for us.
Kailie | 02.11.16 @ 16:55
I've been shopping around for a new card recently so this has a lot of great info, it'll be my first credit card, so i dont know much on what to expect.
Meredith L | 02.11.16 @ 16:55
I will definitely be looking into the Navy FCU but credit card companies, in my opinion, is legalized piracy. People screw up sometimes and it affects their credit rating. People doing their best to climb out of debt can't afford 30+% aprs but if the companies can get away with it then it must be okay.
Alec | 02.11.16 @ 16:56
I've never had any issues paying my credit card bill, so I'm not part of the statistics for that thankfully. But I do have a little bit of debt that I'm hoping to pay off. The interest isn't too bad and the reward points I get go in to paying down the debt more, so I'm not spending what I'm earning.
Carla Truett | 02.11.16 @ 16:56
You really have to watch the rates and the fine print these days. We only have 1.
Kyle | 02.11.16 @ 16:56
Great info. I am always very cautious to look at rates and any important information when it comes to credit cards before settling on a specific one.
Amanda | 02.11.16 @ 16:57
credit cards can be confusing! And many people don't check into them before signing up. I've gotten many offers but keep trashing them.
Elaine | 02.11.16 @ 16:57
Everything seems to be on arise so this doesn't come as a shock. Just got a note that even my water is going up 5%.
$commenter.renderDisplayableName() | 12.04.16 @ 12:17
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