Americans carrying more debt, and many don’t know their rates

Despite the increase in revolving debt carriers, Americans’ favorite credit card perk has nothing to do with their APRs. Cash back is the most-favored credit card feature, far above low APR, wide acceptance, travel perks, and a slew of other features.

The survey results reveal a potentially troubling trend: Americans are paying too much attention to their credit card rewards and not enough to their debt. But it’s not all black and white, and results varied by generation. Here’s a deep dive into the data, as well as some expert advice about how you can avoid some of the most common credit card pitfalls.

Young adults are least aware of their cards’ interest rates

Over a third (35%) of all U.S. adults carry credit card debt from month to month, up from 29% last year. Of this group of debt carriers, 43% say they don’t know the attached interest rates. This is especially troubling given that the average credit card interest rate is at an all-time high approaching 20%, thanks to the series of rate hikes announced by the Federal Reserve throughout 2022.

Interest rate awareness increases with age, though. The survey found that 50% of Gen Zers with credit card debt don’t know all of the rates attached to their credit cards, followed by 46% of millennials, 43% of Gen Xers and 39% of baby boomers.

Cardholders value cash back rewards

Cash back is the best credit card feature, according to 36% of cardholders. That was the most popular response, well ahead of “it is accepted most places” (16%) and “it has a low interest rate” (10%). Only 7% said travel rewards, and another 7% said low fees.

Cash back topped the list for all generations, its popularity level growing with age: 23% of Gen Z cardholders say it’s the best aspect of having a credit card, then 33% of millennials, 36% of Gen Xers and 41% of boomers. Though younger generations ranked cash back first, categories like “travel perks,” “customer service,” and “retail perks” were more favored by Gen Zers and millennials than older generations.

Develop a debt payoff strategy

Cash back is even the favorite feature among people with credit card debt, though by a smaller margin (27% vs. 17% who said “it is accepted most places” and 14% who said “it has a low interest rate”).

And while credit card rewards programs can be lucrative, the value of the rewards you earn will be reduced or nullified when you carry debt.

“Forget about rewards for now, because it doesn’t make sense to pay 20% in interest just to earn 1, 2 or even 5% in cash back or airline miles,” says Rossman.