Credit Card News: Your Money

The most frequently cited reasons for opening a new credit card account were to get cash back rewards and to save money with a low interest rate, according to a recent survey of adults across the nation.

The survey asked consumers about their credit card habits and found that most people believe they are using credit responsibly. However, a majority of respondents were carrying balances on multiple credit cards. That suggests that many people could use a refresher on financial education—or maybe an initial course in responsible credit card usage. The head of the survey said the results indicated that many people don’t understand how their spending habits affect their bigger financial picture.

Key findings include data on number of credit cards, amount of debt

• One-third of those surveyed had four or more credit cards. The same amount said they use their credit cards “very often” to make purchases.
• One-quarter of respondents said they have less than $100 total debt across all their credit cards. But 21% have $5,000 or more in debt when they add up all their credit card balances.
• Only 35% of folks always pay their credit card bill in full. Nineteen percent sometimes pay the whole bill, and 17% never pay the full amount due.
• Even though so many people are carrying balances, 71% still believe they are using credit wisely.
• The top two most popular reasons for opening a new credit card account were to get cash back rewards and to get a lower interest rate.

Ways to be wise

For consumers who are open to learning new ways to be smart about using their credit cards, some tips to keep in mind are:
• Always pay your balance in full by the due date each month. Set up payment reminders and automatic payments. Try to always pay the entire amount due, so you don’t end up paying interest on your purchases.
• Only have the number of credit cards you really need. If you have multiple credit cards in order to take advantage of rewards programs, that’s great. Just make sure you’re not maxing them out and getting behind on your payments.
• Keep your credit card balance to 30% or less of your total available credit. Don’t charge your card all the way up to your credit ceiling. It’s bad for your credit score, and may make it hard to pay the whole balance off.