Credit cards are a regular feature in our daily lives, but many millennials don’t know even basic info about the cards they have in their wallet.
On a sunny afternoon in New York City, GenFKD hit the road to talk to local millennials about their credit cards. After a few brief chats under the summer sun, we found that many young people aren’t aware of the interest rate on their cards, or that their rates have likely increased.
Newsweek recently covered this issue in a bombshell article titled How Credit Card Companies Prey on Millennials. While interest rates are just beginning to creep up, credit card rates are trending higher, even for people with good credit.
“The average rate offered on new credit cards is now above 15%,” Newsweek reported.
Why are rates high for us, but not for bankers?
Congress tried to rein in the credit card industry’s sometimes unsavory practices with legislation that was signed into law back in 2009. After these new restrictions came into effect, card issuers had to find new ways to extract profit out of customers. One of the easiest ways to do so is hiking up regular people’s interest rate.
People are getting more comfortable with higher levels of debt now that the Great Recession is behind us. Household credit debt has been increasing steadily, and with interest rates going higher and higher, that means that freeing yourself from debt is becoming progressively more challenging.
While Newsweek points out that only about a third of millennials actually use credit cards, that number will probably grow in the future as we mature into fully-functioning adults.
Be sure to shop around when signing up for a credit card. Many cards offer 0% promotional rates, and there already may be one in your pocket. Better yet, use credit cards to build your credit, but make a habit of paying off your balance monthly.