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We’re halfway through 2024 and Americans are still living paycheck to paycheck with limited savings or an inability to endure a cash emergency. As a result, millions of Americans borrow money to pay for planned and unplanned expenses. From student loans to sky-high rent, rising interest rates, and increasing prices at grocery stores, it’s daunting to be in a situation where you’re constantly worrying about money and your financial well-being.
Being in this heightened state can lead to sleep problems, issues with blood pressure, and just an overall sense of anxiousness. According to a survey more than half of Americans say that money negatively impacts their mental health. Economic factors are playing a large part in overall mental deterioration, and despite the current administration’s efforts, there still is very little relief from financial strain.
When an emergency occurs, many Americans turn to traditional banking and financial solutions like credit cards to borrow money that don’t always have their best interest in mind. Many lending products come with hidden “junk fees” and an annual percentage rate (APR) that is misleading for consumers and doesn’t truly reveal the costs to those in need. Most individuals and households carry a credit card balance month to month and are unable to make payments. Credit card interest margins rise daily, and consumers are cash-poor, but credit-rich.
Earlier this year, President Biden took another initiative against junk fees—specifically credit cards. Under the new rule, most credit card late fees will be capped at $8. The Administration estimates credit card companies are generating five times more on late fees than it costs to recoup the late payment. Biden said, “They’re padding their profit margins and charging hard-working Americans. This action will collectively save families $10 billion in credit card late fees every year.” On average, credit card companies were charging $32, making it more difficult and stressful for hardworking Americans to save and not be cash-strapped. It goes way beyond late fees, however, which is why it’s surprising that the entire issue is not being addressed and will not solve the overlying problem.
Even with Biden’s new plan on credit card fees and forgiving millions of borrowers’ student loan debt isn’t enough and won’t protect consumers from all the costs they endure when they swipe.
The data on all the junk fees consumers incur when borrowing money is staggering. A recent 2023 Cash Poor report showed that Americans pay over $25 billion dollars a year in hidden fees to financial platforms. These are everyday, middle-class people who earn over six figures, have college degrees, and still feel the financial impact. It’s worth noting that unplanned expenses cost the average American family living paycheck to paycheck nearly $2,000 a year. These are unavoidable, and financial companies shouldn’t be allowed to take advantage of consumers in need. But they do.
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James' World 2 
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