Credit Card Companies Charge Everyone More
Credit card swipe fees keep growing out of control. They hit a record $187 billion in 2024.
The credit card industry tries every contortion it can to find a way this helps consumers, but they strike out every time.
The latest swing and miss was highlighted by the Wall Street Journal. (Why Credit Card Fees Keep Getting Higher - WSJ)
The story shows credit card companies keep ramping up annual fees they charge cardholders on their rewards cards. The story reports:
- “JP Morgan Chase increased its Sapphire Reserve card annual fee to $795, the third and largest increase since its 2016 launch.”
- “Top credit card companies have stumbled on a winning formula at odds with almost every other sector of America’s inflation-obsessed economy: Raising their prices is good for business.”
- “But many perks go unredeemed. According to the latest data from the Consumer Financial Protection Bureau, cardholders earned over $40 billion in rewards in 2022, yet more than $33 billion went unclaimed—a 40% jump since before the pandemic. The average account sat on $150 in unused perks.”
- “Redemption now requires more effort than ever before. Jacob Moon, a 36-year-old investment banker in Los Angeles, didn’t mind the fee increase, but bristled at the fine print. Many perks are delivered in increments and expire monthly. For instance, Chase is advertising a $500 hotel credit as a new benefit with the Sapphire Reserve. But half of the credit must be used in the first six months of the year, and half of it in the last six months.”
- “Regardless of whether perks are redeemed, the card issuer collects the fee.”
That’s right – no matter what happens, big banks and credit card companies keep getting big fees even as they make it harder to use rewards.
While the big banks falsely claim they will get rid of rewards if swipe fees go down, does that mean they will get rid of the annual fees they charge on rewards cards?
Of course not (which you can read about here and here).
The credit card industry will keep burying Main Street and consumers with fees no matter what happens – and, of course, they will keep giving rewards because that is how they get people to use the cards. It’s time for a change.
COMPETITION IS BETTER FOR EVERYONE
IT'S TIME TO PASS THE CREDIT CARD COMPETITION ACT