Close Menu
  • Home
  • Finance News
  • Personal Finance
  • Investing
  • Cards
    • Credit Cards
    • Debit
  • Insurance
  • Loans
  • Mortgage
  • More
    • Save Money
    • Banking
    • Taxes
    • Crime
What's Hot

EarnIn launches Early Pay for paychecks | PaymentsSource

March 21, 2025

How to Retire Like an Adult: An 11-Point Checklist for Responsible Freedom

March 21, 2025

How Trump’s Chaos Is Exacerbating The Financial Woes Of Colleges

March 21, 2025
Facebook X (Twitter) Instagram
Facebook X (Twitter) Instagram
InCapital Direct
Subscribe
  • Home
  • Finance News
  • Personal Finance
  • Investing
  • Cards
    • Credit Cards
    • Debit
  • Insurance
  • Loans
  • Mortgage
  • More
    • Save Money
    • Banking
    • Taxes
    • Crime
InCapital Direct
Home»Finance News»CFPB takes aim at credit card issuers over ‘bait-and-switch’ rewards
Finance News

CFPB takes aim at credit card issuers over ‘bait-and-switch’ rewards

December 20, 2024No Comments3 Mins Read
Facebook Twitter LinkedIn Telegram Pinterest Tumblr Reddit WhatsApp Email
CFPB takes aim at credit card issuers over ‘bait-and-switch’ rewards
Share
Facebook Twitter LinkedIn Pinterest Email

CFPB cracks down on rewards tactics

About 90% of all credit card spending is on rewards cards. But according to the CFPB, an increasing number of consumers have reported that some rewards are hard to redeem or are not worth as much as they thought. In 2023 alone, complaints involving credit card rewards jumped 70% over pre-pandemic levels. 

“Large credit card issuers too often play a shell game to lure people into high-cost cards, boosting their own profits while denying consumers the rewards they’ve earned,” CFPB Director Rohit Chopra said in a statement. “When credit card issuers promise cashback bonuses or free round-trip airfares, they should actually deliver them.”

According to the Consumer Bankers Association, only a small share of credit card users report problems with rewards: Complaints regarding rewards made up just 2% of all credit card complaints reported to the CFPB since January 2020. 

“The only bait-and-switch that’s happening here is from the CFPB once again misrepresenting its own data,” CBA President and CEO Lindsey Johnson said in a statement.

“As the CFPB’s own research shows, credit cards are — by far — the best tool for the one-fifth of Americans that lack access to credit to begin building their financial lives,” Johnson said.

Consumer complaints about credit card rewards are exceedingly rare, the American Bankers Association also noted.

“Despite widespread evidence that credit card rewards programs are highly popular and deliver tremendous value to tens of millions of U.S. cardholders from all walks of life, Director Chopra has once again chosen not to let facts get in the way of his decision to tarnish a hugely popular consumer product,” Rob Nichols, the ABA’s president and CEO, said in a statement.

See also  California Man Indicted In Cryptocurrency Trading Scam

Consumers like reward cards

Even with credit card interest rates near an all-time high, when deciding on a new credit card, 83% of cardholders said their final decision comes down to perks, according to a separate report by CardRates.com.

The majority, or 58%, of credit card users polled by CardRates said they preferred cash back over miles or points. But still, not all cardholders used the credit card rewards available to them.

Travel rewards can be more lucrative but are notoriously harder to redeem, Bankrate also found. Only 11% of rewards cardholders redeemed for a free hotel stay, while just 10% redeemed for a free flight, according to Bankrate.

“Failing to redeem your rewards is a major missed opportunity,” said Bankrate’s senior industry analyst Ted Rossman. “While the best rewards can be subjective, the worst reward is getting nothing at all.”

How to make the most of rewards

In the best-case scenario, credit card rewards are “almost like free money,” said Bill Hardekopf, a credit card expert and CEO of BillSaver.com.

But that’s only if you pay your credit card off on time and in full every month. With credit card rates over 20%, on average, the benefits of cash back or other perks are quickly eroded if you carry a balance.

“If you miss a payment or are late on a payment, you get socked with a huge penalty — that interest rate will far outweigh the rewards you are going to get,” Hardekopf said.

When it comes to which reward card to choose, Hardekopf recommends a cash-back card with a low, or no, annual fee. “The best reward you can get is cash back because cash talks — it’s easy to understand and there’s no problem redeeming.”

See also  Watch for these pitfalls before donating crypto to charity

Subscribe to CNBC on YouTube.

Source link

Aim baitandswitch Card CFPB credit issuers Rewards takes
Share. Facebook Twitter Pinterest LinkedIn Tumblr Telegram Email
Previous Article13 Of The Most Important Things I Learned About Wealth In The Last 13 Years.
Next Article How are options taxed? Key things to know about capital gains taxes on options

Related Posts

How Trump’s Chaos Is Exacerbating The Financial Woes Of Colleges

March 21, 2025

Student loans will be handled by Small Business Administration: Trump

March 21, 2025

Student Loan Recertification Extensions Announced For Borrowers

March 21, 2025
Add A Comment
Leave A Reply Cancel Reply

Top Posts

New Social Security increases may prompt higher tax bills, Medicare premiums

January 8, 2025

New York AG announces bill to protect consumers after Trump hobbles CFPB

March 13, 2025

Best Car Insurance Companies 2024

October 22, 2024
Ads Banner

Subscribe to Updates

Subscribe to Get the Latest Financial Tips and Insights Delivered to Your Inbox!

Stay informed with our finance blog! Get expert insights, money management tips, investment strategies, and the latest financial news to help you make smart financial decisions.

We're social. Connect with us:

Facebook X (Twitter) Instagram YouTube
Top Insights

EarnIn launches Early Pay for paychecks | PaymentsSource

March 21, 2025

How to Retire Like an Adult: An 11-Point Checklist for Responsible Freedom

March 21, 2025

How Trump’s Chaos Is Exacerbating The Financial Woes Of Colleges

March 21, 2025
Get Informed

Subscribe to Updates

Subscribe to Get the Latest Financial Tips and Insights Delivered to Your Inbox!

© 2025 incapitaldirect.com - All rights reserved.
  • Contact
  • Privacy Policy
  • Terms & Conditions

Type above and press Enter to search. Press Esc to cancel.