An update on the cost and rewards of owning credit cards found two striking trends: Initial cash/points bonuses are dropping, while cash-advance fees are surging.
The second-quarter 2015 Credit Card Landscape Report from CardHub and WalletHub found that cash-based bonuses fell 5.09 percent and their point/mile counterparts dropped 2.84 percent.
Meanwhile, “credit card companies continue to exploit the weakness of cash-hungry customers,” the report states. Credit card issue have increased cash advance fees by roughly 60 percent since the end of 2010. The average cash advance fee is now the greater of 3.98 percent or $14.08.
Credit card reform laws enacted five years ago may have had an impact on those cash-advance fees, since the new consumer protections reduced the ability of card providers to issue penalty fees without restrictions. This prompted issuers to raise other fees.
“Card issuers seem to be focused on attracting new customers who have existing debt, while slowly steering away from people intent on incurring new debt in a recovering economy,” the update concluded, citing the fact that “0% balance transfer periods” have stabilized, while 0% purchase terms are becoming shorter.
Here are some other key findings related to credit cards:
- Consumer complaints regarding “advertising and marketing” as well as “rewards” have skyrocketed in 2015, rising roughly 180 percent and 169 percent, respectively.
- Rates held fairly stable during the second quarter, with the notable exceptions being APRs for people with fair credit (which rose 3.61%) as well as those for people with excellent credit (which fell 1.47%).
- Following a 40 percent run-up over the past 3 years, the value of credit card initial rewards bonuses experienced something of a correction during Q2 2015. Interested consumers should therefore jump on the opportunity to apply for such a bonus while their value is still near historical highs.