Credit card debt rises as perks increase

Voracious spending and historically high inflation have helped push credit card debt to an all-time high of nearly $1 trillion — and credit card issuers are offering all sorts of incentives to entice new customers.

Why it matters: Travel points, cash back and other perks can be a siren song for many Americans fighting their way through rising prices, even amid concerns about an eventual recession.

• There has been an increase in the number of people struggling to make payments, according to data from the Federal Reserve.

Send the news: This week, DoorDash and Chase unveiled a new Mastercard-branded rewards card for power users of the food delivery platform.

• Among other benefits, cardholders get 4% cash back on DoorDash/Caviar orders, a free year of the DashPass subscription service ($10 value per month), and $100 cash back after spending $500.

Yes but: There’s no such thing as a free lunch, even if it’s delivered for free.

• The Fed’s monetary tightening offensive is driving up borrowing costs, including annual rates, which recently set a record above 19%. For consumers who do not paying their balance in full every month, the costs can add up considerably.
• Meanwhile, cool perks don’t come cheap: The DoorDash-Chase card’s APR has a variable rate between 19.49% and 28.24%.

Credit cards “are like power tools: as in, they can be very useful, or they can be dangerous. It all depends on how you use them,” Ted Rossman, senior industry analyst at Bankrate, told Axios in an email. Credit card rewards are generally more generous than their debit counterparts.

• According to a Bankrate survey, 54% of cardholders pay their balance in full each month. “For them, life is great,” Rossman said, but added that the other 46% should prioritize low interest rates “rather than chasing rewards.”

What they say: Ed Olebe, president of Chase Co-Brand Cards, said the banking giant was not trying to encourage overspending with its DoorDash partnership.

• “We never want anyone to get in trouble with a credit card,” Olebe told Axios on the sidelines of a press conference. The new card is “a better resource if you already use DoorDash” and helps drive loyalty for customers who “want options and value.”

it comes down toRevolving credit is a flexible path to other opportunities, such as home and car ownership, and can help build a credit history.

• “The current system is the best for the consumer. Be among those who can pay in full and avoid interest,” Rossman said.