hit $870 billion at the end of 2018.

That's a record high.

In fact, over half of Americans who own credit cards

have debt on them.

And part of what gets us into these debt holes

are the tempting offers from credit card companies.

Hidden fees and reward programs can trick customers

into spending more than they otherwise might.

Clip: Wow, look at all the signs.

Narrator: And if that balance isn't paid off in full,

those rewards points aren't going to be worth it in the end.

Let's start with the reward programs.

They offer a variety of benefits, including airline miles,

cash back, and points you can put towards shopping.

This can be great for customers.

I mean, who doesn't like free stuff?

And credit card companies can boost the rewards

when you first sign up for the cards as an extra incentive.

For example, the American Express Platinum card

currently offers 60,000 reward points

if you spend $5,000 in the first three months.

Now, if you're about to make a big purchase,

those points are a nice bonus.

But if you end up spending more than you otherwise would

just to hit that $5,000 mark, consider this.

One point is typically worth only between $0.01 and $0.02,

making those 60,000 points worth

somewhere between $600 and $1,200.

So, let's do the math.

Say you usually spend $500 on your credit card per month,

and you increase that to $1,666 for three months

to get those 60,000 points.

You've now spent $3,500 more than you otherwise would.

And, yes, you may get $1,200 back in points.

But that leaves a difference of $2,300.

That's $2,300 more that you spent overall

and that you're never getting back.

But $1,200 back is the max you'll likely get.

It might be less.

And figuring out exactly how much you're getting

for every dollar spent can be tricky.

In the AmEx Platinum's rates and fees section,

it says, "The value of Membership Rewards points

varies according to how you choose to use them."

So it's hard to be sure

how much value you're actually getting.

And the eagerness to spend for points

can get you into trouble.

Sarah Silbert: Obviously, it's very attractive

to get points or miles from your credit card,

but if you're not paying off your balance in full,

the points or miles that you're earning are not worth it.

Narrator: Because you're going to get hit

with that interest charge.

A credit card's interest rate

is also called the APR, or annual percentage rate.

The APR determines how much you'll be charged

if you don't pay your balance in full by the due date.

On average, the APR for new credit card offers is about 19%.

But store credit cards from places

like Banana Republic, The Home Depot, and Target

have some of the highest rates in the business.

And if you're not paying attention,

those charges can add up.

The average household with credit card debt

pays $1,292 in interest each year.

Now, some credit cards will waive interest fees

for the first few months to a year.

And you might think,

well, this is only a problem for people with bad spending

habits who don't pay off their card in full each time.

Clip: But there's a lot more to it than that.

Narrator: Even if you're responsible with your payments,

there's still other ways credit cards can cost you.

Silbert: There are lots of credit card hidden fees

that you could be surprised by if you're not aware of them.

These fees are hidden in the sense

that they're buried in the fine print.

They're definitely documented,

and you can find them if you look for them.

But they're not super apparent if you're just

glancing at the credit card application online.

Narrator: Some cards have fees you can't avoid

by diligently paying your card on time.

Like a foreign transaction fee.

These are fees placed on purchases you make abroad.

But they can also be charged

on any transaction processed abroad,

even if you yourself are not traveling.

So, if you're making a hotel reservation in Bali

or buying a cool pair of pants from a Japanese website,

you might want to make sure the card provider

isn't charging you a fee to make that purchase.

Foreign transaction fees typically run around 3%,

so for a hotel room that costs $150 a night,

you're paying an additional $4.50.

Just think, you could have bought yourself

an iced coffee with that money.

Other fees to look out for are balance transfer fees,

authorized user fees, late payment fees, and an annual fee.

You could get charged an annual fee once a year

just for having the card.

On some cards, it can be quite high,

like the Chase Sapphire Reserve card,

which has an annual fee of $450.

Ouch.

But the Sapphire Reserve also offers a $300 travel credit

and a hefty sign-up bonus,

so if you're using it for travel

and are a big spender anyway, it might be worth it.

So, with all these sneaky fees and incentives,

how do you avoid a credit card bill at the end of the month

that's higher than you expected?

Silbert: The best way to use credit cards

is to treat them like debit cards.

So that means don't spend anything more than you can afford,

you need to pay your balance off in full,

and that way, any rewards that you're earning

are really rewards in something extra.