It might have happened to you a few times in past years: You received an email or mail notice inviting you to join a class-action lawsuit, or notifying you that you’ve been automatically included. But being part of such a lawsuit might be intimidating, especially if you need to opt in, and would mean surrendering the option to sue individually.
In most cases, there’s little downside to joining these lawsuits, which combine many legal claims — often thousands — into one claim against a single defendant, reducing fees for each claimant and potentially earning a much larger payout.
And there have been many opportunities to do so. Following a series of large opioid settlements, 2022 had the most billion-dollar class-action settlements in U.S. history apart from the tobacco settlements decades ago, according to a report from the national law firm Duane Morris. The stakes are high for class-action lawsuits at this level, as they set standards for corporate responsibility in areas such as data privacy, employee discrimination, securities fraud and civil rights.
But in cases where you suffered significant harm, suing individually could secure a bigger payout.
Jenny Kane
FILE - A stamp is shown on an envelope Friday, May 28, 2021, in Washington. When you receive an email or mail notice inviting you to join a class-action lawsuit, or notifying you that you’ve been automatically included, it might give you pause. Is it worth the small reward — usually under $20 — to give up your rights to sue individually? (AP Photo/Jenny Kane, File)
WHY YOU SHOULD JOIN (OR NOT OPT OUT)
In many cases, class-action lawsuits offer such a minor payout to each victim that participation is a matter of principle, not reward. But even if you receive only $10 to $20 as compensation, joining a collective lawsuit can help other customers or employees get justice, and may deter a company from harmful practices in the future.
“It’s really a trial by proxy,” says attorney Russell T. Abney, who defends victims of dangerous drugs and defective medical devices at the law firm Watts Guerra. “The beauty of the class action,” he says, is that it adds up individual cases to a number that’s high enough to go up against a large company.
In most cases, Abney says, plaintiffs of class-action lawsuits pay legal fees on contingency, which means they don’t pay anything unless they win the case. Lawyers taking on these lawsuits will usually receive payment as a percentage of the settlement won from the company.
If you’re part of the “class” of a lawsuit — that is, if you were affected by the certain event or purchase described — you’ll often be automatically included in the lawsuit. And for certain cases, such as those relating to wage violations or defective products , you may have to opt in.
CLASS REPRESENTATIVES DON’T ALWAYS GET A LARGER PAYOUT
If you feel strongly about the outcome of a class-action lawsuit, you can also participate as a class representative, sometimes called a lead plaintiff. In some cases, becoming a class representative could lead to a bigger payout — but that isn’t always the case.
Even though the class representative is the case’s headline, “That person isn’t necessarily going to get any kind of windfall,” says Jennifer A. Riley, a partner at Duane Morris and vice chair of the firm’s workplace class-action group. She notes that some courts in some jurisdictions would be able to grant a service award to plaintiffs representing the case, which are often between $2,500 and $7,500 , but other courts have found these awards inappropriate. And it’s difficult to discern upfront whether such a service award would be granted.
Class-action lawsuits can also take anywhere from a few months to several years, which can be an excessive commitment for many. The Exxon Valdez oil spill, for example, took 17 years to reach a class-action settlement.
WHEN TO OPT OUT (OR NOT JOIN)
If you plan to make a case of your own, it makes sense to opt out of, or not participate in, a class-action lawsuit.
“If you have your own lawsuit, the value of your claim might be much, much higher as an individual than it would have been as a class member,” says Gerald L. Maatman Jr., a partner at Duane Morris and the chair of the law firm’s workplace class-action group. “You’re trying to decide, ‘If I opt out, am I going to do that much better than I’d do in a class action?’ And in certain circumstances, an individual would do better. They’d get the money quicker, and they’d get more money.”
One example: Following the credit-scoring company Equifax’s data breach in 2017, which compromised the personal data of 147 million people, The New York Times reported that some people took Equifax to small claims courts, winning much larger sums than those who received class-action payouts.
Small claims courts — which handle claims under a few thousand dollars to $15,000, depending on your state — generally charge a small fee t o file, making them a relatively low-cost way to seek damages. Typically, plaintiffs represent themselves in these cases, bypassing costly attorney fees.
If you’re considering a larger lawsuit, though, expenses are much higher. Consulting a lawyer can help you determine whether you have a strong case and how it might unfold.
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Victim of credit card fraud? 6 actions to take now
AP Photo/Keith Srakocic, File
There’s no such thing as a universal best credit card. The right card for you depends on your lifestyle, your goals and your credit history. For instance, if you’re looking for travel rewards but your friend is building credit, the best card for each of you will differ greatly.
And while there may not be one best card for you — the average American has about three cards, according to a 2021 Experian study — there are many times a card can be wrong for a specific situation.
Here are eight times you could be using the wrong credit card, and what you can do instead.
AP Photo/Keith Srakocic, File
There’s no such thing as a universal best credit card. The right card for you depends on your lifestyle, your goals and your credit history. For instance, if you’re looking for travel rewards but your friend is building credit, the best card for each of you will differ greatly.
And while there may not be one best card for you — the average American has about three cards, according to a 2021 Experian study — there are many times a card can be wrong for a specific situation.
Here are eight times you could be using the wrong credit card, and what you can do instead.
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Victim of credit card fraud? 6 actions to take now
AP Photo/Mark Lennihan, File
You may have started out by building your credit with a secured card, student card or alternative card, but once your credit is in better shape, it may be time to upgrade.
If you’ve used a starter card responsibly by keeping your utilization rate low and paying balances in full every month, you may qualify for a card that’s a better fit now. A different card could offer a higher credit limit, better rewards earnings and perks like cellphone protection and travel benefits. Some card issuers may automatically upgrade your card once you’ve reached certain thresholds, while others may not. Contact the issuer to check your options.
AP Photo/Mark Lennihan, File
You may have started out by building your credit with a secured card, student card or alternative card, but once your credit is in better shape, it may be time to upgrade.
If you’ve used a starter card responsibly by keeping your utilization rate low and paying balances in full every month, you may qualify for a card that’s a better fit now. A different card could offer a higher credit limit, better rewards earnings and perks like cellphone protection and travel benefits. Some card issuers may automatically upgrade your card once you’ve reached certain thresholds, while others may not. Contact the issuer to check your options.
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Victim of credit card fraud? 6 actions to take now
AP Photo/Jenny Kane, File
New cardholders can often earn a lucrative welcome bonus but usually with a caveat: You have to spend a minimum amount within a specific time frame to get it. Note the spending requirements for a card’s sign-up bonus, and use the new credit card enough by the deadline. If you continue to pay with an older credit card that’s already in your wallet, you risk missing out on the bonus if you don’t spend enough on your new card.
A little planning can help. Think about upcoming big purchases you need to make, such as a car repair or a new laptop. Just one of those could be enough to hit the bonus’s spending requirements.
AP Photo/Jenny Kane, File
New cardholders can often earn a lucrative welcome bonus but usually with a caveat: You have to spend a minimum amount within a specific time frame to get it. Note the spending requirements for a card’s sign-up bonus, and use the new credit card enough by the deadline. If you continue to pay with an older credit card that’s already in your wallet, you risk missing out on the bonus if you don’t spend enough on your new card.
A little planning can help. Think about upcoming big purchases you need to make, such as a car repair or a new laptop. Just one of those could be enough to hit the bonus’s spending requirements.
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Victim of credit card fraud? 6 actions to take now
AP Photo/Paul Sakuma
It’s true a store credit card can save you money, especially if you are a frequent, heavy spender at that store. However, the rewards earned with a store credit card are often only redeemable at that store, limiting their usefulness.
Most shoppers would be better off using a general rewards credit card and earning more flexible rewards. Some cards have elevated rates for online shopping purchases, while others earn as much as 5% back at popular merchants like Target, Walmart and Amazon.
AP Photo/Paul Sakuma
It’s true a store credit card can save you money, especially if you are a frequent, heavy spender at that store. However, the rewards earned with a store credit card are often only redeemable at that store, limiting their usefulness.
Most shoppers would be better off using a general rewards credit card and earning more flexible rewards. Some cards have elevated rates for online shopping purchases, while others earn as much as 5% back at popular merchants like Target, Walmart and Amazon.
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Victim of credit card fraud? 6 actions to take now
AP Photo/Elise Amendola, File
Several cards boast a top 5% cash-back rate in popular spending categories like grocery stores, restaurants and gas. The catch, though, is that you’ll have to do some work to earn that rate. In most cases, you’ll need to track categories: Qualifying 5% purchases may rotate quarterly, or you may have to choose your own categories. If you’re spending outside of those categories with this card, you’ll likely earn a paltry 1% instead of the juicy 5% you think you’re earning.
Most times, you’ll have to activate the bonus categories before the issuer’s deadline to earn the 5%, even if you’re spending in the right category. Plus, you’ll likely run into spending caps in those 5% bonus categories; once you hit those caps, the rewards rate drops to 1%. For those who find a 5% card to be high maintenance, opt for one that earns a flat 2% cash back on every purchase instead.
AP Photo/Elise Amendola, File
Several cards boast a top 5% cash-back rate in popular spending categories like grocery stores, restaurants and gas. The catch, though, is that you’ll have to do some work to earn that rate. In most cases, you’ll need to track categories: Qualifying 5% purchases may rotate quarterly, or you may have to choose your own categories. If you’re spending outside of those categories with this card, you’ll likely earn a paltry 1% instead of the juicy 5% you think you’re earning.
Most times, you’ll have to activate the bonus categories before the issuer’s deadline to earn the 5%, even if you’re spending in the right category. Plus, you’ll likely run into spending caps in those 5% bonus categories; once you hit those caps, the rewards rate drops to 1%. For those who find a 5% card to be high maintenance, opt for one that earns a flat 2% cash back on every purchase instead.
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Victim of credit card fraud? 6 actions to take now
AP Photo/Jenny Kane, File
According to a 2020 NerdWallet study, 14% of Americans view credit cards as “complicated,” and it’s not hard to see why. Some issuers offer suites of cards in the same family and have names that are nearly identical. The logos of some issuers are strikingly similar, too. Perform a quick audit of your credit cards to make sure that they are the cards you intended to get. Cards that look and sound nearly the same may be worlds apart in terms of fees and rewards structure.
AP Photo/Jenny Kane, File
According to a 2020 NerdWallet study, 14% of Americans view credit cards as “complicated,” and it’s not hard to see why. Some issuers offer suites of cards in the same family and have names that are nearly identical. The logos of some issuers are strikingly similar, too. Perform a quick audit of your credit cards to make sure that they are the cards you intended to get. Cards that look and sound nearly the same may be worlds apart in terms of fees and rewards structure.
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Victim of credit card fraud? 6 actions to take now
AP Photo/David Goldman, File
Balance transfer cards can be excellent tools for paying off debt. They consolidate several debts into one place, making them easier to keep up with, and they can give you a breather on interest for many months. However, if you’re using a balance transfer card for everyday expenses as well, it will be hard to whittle that balance to $0. Plus, many balance transfer cards don’t come with rewards. Leave the balance transfer card at home but take the cash-back card with you — and be sure to make regular payments toward both.
AP Photo/David Goldman, File
Balance transfer cards can be excellent tools for paying off debt. They consolidate several debts into one place, making them easier to keep up with, and they can give you a breather on interest for many months. However, if you’re using a balance transfer card for everyday expenses as well, it will be hard to whittle that balance to $0. Plus, many balance transfer cards don’t come with rewards. Leave the balance transfer card at home but take the cash-back card with you — and be sure to make regular payments toward both.
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Victim of credit card fraud? 6 actions to take now
AP Photo/Richard Drew, File
It pays to know the rewards rates for all of your credit cards. Say you have two credit cards, one that earns 4% on gas and another that earns only 1%. Using the 4% card whenever you fill up would return $30 more if you spent $1,000 annually on gas. That $30 may not seem like a lot, but small amounts add up, especially if you have multiple rewards credit cards. To help keep track of different rewards rates, you could label your cards with sticky notes or keep a small reference guide in your wallet.
Often you’ll have to keep spending caps in mind, too. Issuers typically cap earnings on their highest rewards rates after you reach a certain amount of spending in a particular category. Make sure you track your progress toward that cap and switch to another card with a better rate when you reach it — until the limit resets.
AP Photo/Richard Drew, File
It pays to know the rewards rates for all of your credit cards. Say you have two credit cards, one that earns 4% on gas and another that earns only 1%. Using the 4% card whenever you fill up would return $30 more if you spent $1,000 annually on gas. That $30 may not seem like a lot, but small amounts add up, especially if you have multiple rewards credit cards. To help keep track of different rewards rates, you could label your cards with sticky notes or keep a small reference guide in your wallet.
Often you’ll have to keep spending caps in mind, too. Issuers typically cap earnings on their highest rewards rates after you reach a certain amount of spending in a particular category. Make sure you track your progress toward that cap and switch to another card with a better rate when you reach it — until the limit resets.
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Victim of credit card fraud? 6 actions to take now
AP Photo/Matt Rourke
Though they may look and feel virtually the same, a debit card is very different from a credit card. Credit cards offer protections and perks that debit cards (and cash) do not. You can earn cash back and other rewards with credit cards that you won’t get with debit, and it’s often easier to recover from losing a credit card than a wallet full of cash. More importantly, responsible credit card use builds your credit score, which can translate into more favorable loan terms and insurance rates, among other money-saving benefits.
AP Photo/Matt Rourke
Though they may look and feel virtually the same, a debit card is very different from a credit card. Credit cards offer protections and perks that debit cards (and cash) do not. You can earn cash back and other rewards with credit cards that you won’t get with debit, and it’s often easier to recover from losing a credit card than a wallet full of cash. More importantly, responsible credit card use builds your credit score, which can translate into more favorable loan terms and insurance rates, among other money-saving benefits.
