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Are credit card perks worth the fees? Kansas Citians, Biden administration not convinced

Credit Card perks in question
Posted at 5:44 PM, May 13, 2024
and last updated 2024-05-13 19:24:32-04

KANSAS CITY, Mo. — The Biden administration is taking a closer look at credit cards.

They argue credit card holders could be paying more in fees than the card’s perks are worth.

KSHB 41's Abby Dodge spoke with credit card users who were not aware of a hearing at Capitol Hill but said they keep their cards handy for big purchases, hoping to earn a few points in return.

“I really try to use cards that have rewards back,” said GiGi Jones, who was traveling Monday. “Because to me, why have them if you are not getting anything in return, right?”

The Biden administration’s scrutiny of credit cards is just the latest push for consumer protections.

Already this year the Consumer Financial Protection Bureau lowered late fees for credit cards.

Additionally, the U.S. Department of Transportation said it would require airlines to give customers cash refunds if their flight is canceled or seriously delayed.

A large percentage of Americans use travel credit cards to try and save on flights and hotels — 41%, according to NerdWallet.

The fees and rates can add up even if you’re paying off your card each month.

LaTasha Jacobs, the executive director of Pathway Financial Education, says credit card opening bonuses and promised savings can be used as a marketing tactic.

“A lot of times, those are ways for credit card companies or creditors to get new customers or expand their customer base," Jacobs said. “It’s that shiny penny. It’s that thing to go for.”

Jacobs added it is important to read the disclosure and weigh the benefits of a card before signing up.

“When it comes to annual fees specifically, understanding and doing the math breakdown on how much you have to spend in order to earn that cashback reward for the annual fee to basically be covered in that,” she said.

While there are zero fee cards out there, some credit cards have annual fees of more than $600 per year.

Jones said her cards are all under $100 a year, but she still struggles to see a benefit on some.

“So I guess I’m paying for the plastic, right?” Jones questioned.

Interest rates on many credit cards are more than 24%, another concern of the administration.