Survey Finds 40% of Credit Card Debtors Don’t Know Their Interest Rate
A recent consumer survey commissioned by Bankrate found that 40 percent of credit card debtors don’t know the interest rate on their primary card with a balance. Bankrate measured the average credit card rate at 16.3 percent, and the Federal Reserve measured it at 17.13 percent among accounts assessed interest.
Another finding from the survey is that nearly half of credit card holders have either never switched their most-used cards or have not switched in the last five years, including 26 percent who have never switched, 12 percent who switched 5 to 10 years ago, and 11 percent who switched at least 10 years ago.
“If you haven’t signed up for a new credit card in a while, you’re missing out. In recent months, we’ve seen some of the best sign-up bonuses ever,” said Ted Rossman, senior industry analyst at Bankrate. “And ongoing incentives continue to evolve, too. As long as you’re paying in full and avoiding interest, it’s important to match your top spending categories with the right rewards cards.”
Alternatively, 21 percent of credit cardholders have changed their primary card within the past year, with 53 percent of those cardholders saying that they switch cards frequently. Through September 2021, banks originated 53.1 million credit card accounts.
The most popular credit card feature among cardholders is cash back, with 41 percent of cardholders saying that cash back rewards are their favorite part of their primary credit card. Other features cardholders noted as beneficial were that the card is accepted most places, has a low interest rate, and has travel rewards.
“It’s a big mistake to chase rewards if you’re carrying credit card debt from month to month. The average credit card charges more than 16 percent, so the math doesn’t work out in your favor,” Rossman said. “Even the most generous cash back cards tend to give no more than five percent cash back⎯and that’s on select categories, not on all of your purchases.”