You may not give much thought to how you use your credit card, but your issuer sure does. Credit companies know that you fit into one of three distinct credit card personality types. Here's a rundown of all three.
Type 1: the Revolver
Let's get this out of the way first -- if you're a Revolver, your credit company loves you. You're the kind of customer they want to keep on their books as long as possible. What is it Revolvers do that makes them so desirable, you ask?
It's simple, really. Revolvers are practically money machines for credit companies. This credit card personality type gets its name from the unpaid balance that comes back around every month, causing revenue-generating interest to accrue and drive up the total amount you'll eventually pay. Revolvers are probably the most diverse type of credit card user, making up a broad demographic that includes both minimum-wage workers and high-powered financiers.
Even if you're not the type of debtor to buy big-ticket items on a small-time budget and make minimum payments on a maxed-out limit, carrying a balance month to month is all it takes to fit in with the Revolvers. It isn't bad to be a Revolver, necessarily -- it's just that you often end up paying more for most things than other people do.
Type 2: the Deadbeat
Contrary to its popular usage as one who chooses to sneak away with debts unpaid, the Deadbeat is a characteristically responsible credit user. Deadbeats get that negative name because, well, they don't tend to make the credit companies a lot of money.
The Deadbeat type is defined by one simple trait -- something that's undesirable to credit issuers but quite desirable to just about everyone else. Deadbeats, those scoundrels, pay their credit card bill in full every month. Credit users who are unshakable deadbeats will never pay a single cent in interest, keeping their cost of credit as low as fiscally possible. The Transactor, a slightly more easygoing cousin of the Deadbeat, has been known to exist as well, typically paying their balance in full and on time but sometimes letting small amounts ride month to month.
Deadbeats tend to be financially responsible people who shy away from spending more money than they know they can afford to use, even in the face of strong desires and tantalizing bargains. If you're a credit card Deadbeat and you're not admired for your self-control, the people around you probably just aren't paying close enough attention.
Type 3: the Card Hacker
Now, don't be alarmed. Hacker in this sense doesn't refer to an info-phishing fraudster or identity thief. Card Hackers are the sort of credit users who might open two cards at once -- one with big bonuses and double rewards in key categories but an inadvisable APR, for example, and another with a bare-bones reward structure and low or zero-percent interest on balance transfers for the first 12 months. If you're already aware of why they'd do this, you might just be a Card Hacker at heart.
To finish the trick, Card Hackers would then proceed to charge a few thousand dollars on the big rewards card -- book a vacation they'd already budgeted for, maybe -- and then immediately shoot the charge over to the card with low rates on balance transfers. When the dust clears, what's left is a fat stack of earned rewards points and a full year to pay off their balance before their non-zero interest rate kicks in.
This type of credit card use might sound exciting, but it's not without its risks. If you're going to give credit card hacking a try, it's important to first take into account any balance-transfer fees, which may negate the benefits. Also, make sure you have extra reserves of attention to pay to your personal finances. One little slip-up and you might find yourself wishing you'd been less adventurous.
Which type are you?
If we just go by the statistics, you're probably a Revolver. According to an April 2012 study by the Financial Industry Regulatory Authority, 60 percent of women and 55 percent of men carry a month-to-month balance on their credit card. Not only that, but about 40 percent of U.S. adults pay just their minimum payment each month, costing themselves more than the retail price of their purchases.
Not that there's anything wrong with being a Revolver, or a Card Hacker for that matter. How you choose to use your credit is your own business, after all. Our recommendation, though? Don't let the nasty-sounding term scare you off. When it comes to credit cards, it's good to be a Deadbeat.