Credit Card Woes
Audio version available here:
Length: approx. 1 min. 20 sec.
Despite 84% of American adults using credit cards for nearly 36% of their purchases, the staggering report of $130 billion paid by Americans in credit card interest and fees can seem unreasonable. The numbers were recently revealed by the Consumer Financial Protection Bureau for 2022, however, many expect this number to be overshadowed by 2023’s statistics.
By far the most culpable for the $130 billion is late fees, so much so that the Biden administration has attempted to reign in fee rates through legislation. Avoiding late fees and interest sounds simple in theory: pay your card balance on time. Unfortunately, the reality is that these fees typically affect lower income households due to the lure of purchasing high-cost items with no upfront cost to the consumer. In hopes of avoiding potential late fees and interest, some decide to overpay their card and use the negative balance to their advantage. In the long run, this does not have any affect on your credit score, and a better method to keep your score healthy is a low credit utilization ratio.
Ultimately, like many financial decisions, using a credit card takes strategy, especially if the card is for your business. Get the right guidance for your business by reaching out to our experts at XQ CPA. Give us a call or schedule a consultation online. We are here to help.
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