WASHINGTON—The Federal Reserve’s December rate hike will cost consumers roughly $1.46 billion in additional credit card finance charges during 2018, and cash rewards bonuses continue to climb, according to WalletHub’s latest Credit Card Landscape report.
Initial rewards bonuses made big moves in the past 12 months, with cash-based bonuses increasing in value by 14.42% and points/miles bonuses falling 17.82%, said WalletHub—further indicating how the major issuers are investing heavily in cash back.
Turning to consumers, they are shouldering a lot more debt, reported WalletHub, which expects consumers this year will pay an additional $7.4 billion in interest due to the Fed rate hikes over the last two years and those that are expected in 2018.
The average credit card APR rose 16 basis points during Q4 2017, due in large part to the Federal Reserve’s December rate hike, WalletHub stated.
Other report highlights:
- Average APRs for several credit card segments are at the highest point since WalletHub began tracking this data in 2010, including credit cards for people with good credit (19.14%), people with excellent credit (13.89%) and students (17.78%).
- The rate at which credit card users earn rewards on purchases is trending upward.
- Credit card companies are emphasizing balance transfers over new-purchase financing, offering 0% intro rates for 13% longer and charging slightly lower regular APRs. Balance transfer fees have also gotten 2.69% cheaper in the last 12 months. This trend, which began to emerge in Q4 2013, reflects the fact that credit card debt levels are nearing record territory, WalletHub said.
- The average annual fee ($15.75) is down 6.14% year over year.
- The average foreign-transaction fee (1.61%) has fallen 36% since Q4 2014 and more than 20% in the past year alone.
- The average cash advance fee is now the greater of $12.65 or 3.27% of the amount withdrawn, which marks a 43% increase in five years. “In other words, credit card companies are testing the limits of how much they can exploit cash-hungry customers. And nothing’s stopped them yet,” WalletHub said.
- A record number of credit card complaints were filed with the CFPB in Q4 2017, as complaints rose more than 38% from Q3.