Survey: Credit card user habits, characteristics

Richard Barrington
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Richard Barrington
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One thing many Americans have in common is that they are regular credit card users. However, a new CardRatings survey found significant differences in how people use their credit cards.

CardRatings surveyed 700 credit card users aged 18 and over to ask them about their credit cards and how they use them.

Using the survey results, CardRatings can assemble a profile of how typical credit cardholders use their cards. What follows is a summary of this profile, along with some commentary on the credit card habits revealed by the survey.

You may find it worthwhile to compare your credit card habits with those of the survey respondents. After all, those habits reveal whether you are using your credit card or your credit card is using you.

How do people use their credit cards?

Check out these significant habits of credit card users:

  • A few survey respondents admitted to having 10 or more credit cards, but the most common response was the 49% who said they had one or two cards.
  • Nearly three out of four (74%) credit card users say they typically pay their balance off in full every month.
  • The most common balance amount credit cardholders say they carry is between $500 and $1,000, with 28% of survey respondents saying their usual balance falls within this range. That size balance is much lower than the average balance cited by the Federal Reserve and other sources as being around $6,000, but that’s because a relative few very large balances can pull the overall average way up.
  • When it comes to interest paid on those balances, 34% of respondents say they pay $101 to $500 per year in interest.
  • Respondents are nearly evenly split between those who pay an annual fee and those who don’t. Forty-nine percent say their cards don’t charge a fee, and 47% say they do. The remaining 4% are unsure.
  • A vast majority of respondents (80%) are content with their current cards. Fifty-two percent say they are satisfied though not thrilled, while 28% say they couldn’t be happier.
  • People may be satisfied with their credit cards, but that doesn’t mean they aren’t looking around. Nearly 55% of respondents say they have applied for a new card within the past year.
  • The most common factor respondents consider when card shopping is the annual percentage rate (APR) charged on balances. Twenty-five percent cite this as the main thing they look at, closely followed by 24% who say fees are the most important factor in choosing a credit card.

How many credit cards should you have?

The survey found nearly half of credit card users (49%) say they have one or two cards. The next most common response is from three to five cards, which 36% say they have.

One or two cards is sensible; it can be useful to have a primary card, and then a second one as a back-up.

If you have more than two cards, it should be for specific reasons. For example, you may have a card with especially generous rewards for a specific type of use or a balance transfer card for a specific transaction.

“Obviously, the more credit cards you have, the more complexity you have in managing your finances,” says Gregory Germain, professor of law at Syracuse University. “You have to keep track of the due dates for each of your cards, will need to reconcile the different cards every month, you need to pay your cards on time, so more cards equals more complexity.

Also, you may seek to maximize the rewards that are offered on your cards, and need to keep track of the rewards offered on each card, which is rather complex with cards that offer rolling quarterly benefits,” Germain continues. “You should have as few cards as possible while maximizing the benefits available to you.”

Having multiple cards of course increases the danger that the additional lines of credit could lead you to run up more credit card debt. Certainly, the 3% of respondents who report having 10 or more cards may be flirting with danger. That said, the number of cards isn’t so much the issue as is the ability to control your spending with that much credit at your fingertips.

How many credit card users pay off their balances every month?

One of the most encouraging responses? Seventy-four percent of credit card users say they typically pay off their balances every month.

If you can pay off your balance in full each month to avoid interest charges, your wallet will appreciate your diligence.

How do you ensure you’re paying your balance off each month?

“Nothing magic here: budgeting and keeping up with spending,” says, James Philpot, associate professor and director of the the financial planning program at Missouri State University. “Few of us like the word, ‘discipline’ much less the practice of it, but that is what 90% of consumer financial management is about.”

Importantly, if you’re interested in accumulating and benefiting from credit card rewards, you really shouldn’t carry a balance as that will wipe out your rewards value.

How big is the typical credit card balance?

As for credit card users who don’t pay off their balances each month, big differences emerged in the size of those balances.

More than half (nearly 53%) say their balances are less than $1,000. This split fairly evenly between the 28% who say their balances are between $501 and $1,000, and the 25% who say they are $500 or less.

At the current average credit card rate, respondents with balances of less than $1,000 typically pay about $160 in interest a year.

On the other end of the spectrum, 16% of respondents say their normal balances are above $5,000 – including nearly 9% who say they usually owe more than $9,000.

A $5,000 balance at today’s average credit card rate would cost more than $800 per year in interest. A $9,000 balance would cost more than $1,450. Either one of those figures is too much to pay for a credit card.

How costly is credit card interest?

Most credit card users keep their interest charges under control with just over half (54%) saying they pay $500 or less in annual interest.

On the high side, nearly 10% of respondents say they pay more than $2,000 in credit card interest annually.

That’s too much, but what’s even more disturbing is that nearly a quarter (24%) of respondents say they are unsure how much interest they pay each year.

As a general rule for any financial product, if you don’t pay attention to how much you’re paying for it, chances are you’ll end up paying too much.

Should you choose a card with an annual fee?

Besides interest, another significant cost to having a credit card can be an annual fee.

Forty-seven percent of respondents report having a credit card with an annual fee. In some cases, this could be unnecessary as there are plenty of credit cards available that don’t charge an annual fee.

“Consumers should pay an annual fee only if they are getting something in return that would justify the fee,” recommends Germain. “If you’re not getting tangible financial benefits from the card and are eligible for a no-fee card, then you should certainly avoid the fee.”

Germain also points out that some consumers with less-than-pristine credit, may only qualify for cards with an annual fee. In that case, Germain says, they should consider whether they can accomplish their financial goals – such as building or rebuilding their credit – without a credit card.

Regardless individual circumstances, it makes sense to research multiple options because there are good no-annual-fee credit cards – even for excellent rewards cards and low-interest rate cards.

Do you love your credit cards too much?

More than half of credit-card carrying survey respondents (52%) say they’re at least satisfied with their credit cards, and another 28% say they couldn’t be more happy.

This means just over 80% of respondents are content with their current credit cards. While that’s good to hear, too much contentment could mean missing out on better offers or cards that are a better fit for your lifestyle and wallet. At a minimum, credit cardholders should assess the cards in their wallet once a year or each time they have a significant life change, such as a new job, big move or change in marital or family status to ensure the card still meets their needs.

What should you look for when choosing a credit card?

As it turns out, despite many being fairly happy with their current cards, a good portion of respondents actively shop for a new one.

A total of 55% of respondents say they last applied for a new card within the past year.

As for what they look for, the most common response – 25% – say they mostly look at the APR. That aligns with the roughly same percentage of credit card users who don’t pay off their balances every month. If you carry a balance on your card, the APR you pay on that balance is of utmost importance.

Just under one-quarter of respondents (24%) say they look at fees first when choosing a card. Perhaps that indicates that the nearly half of respondents who are paying an annual fee are doing so intentionally.

Twenty-one percent of respondents say rewards are their main consideration. Looking primarily at rewards makes sense if you rarely or never carry a balance. In that case, you don’t have to worry about the cost of your card undermining the value of you rewards.

Another significant portion of people (19%) look mostly at signup bonuses when choosing a card. While certainly a factor to consider, it shouldn’t be the only factor since the ongoing terms – especially the APR, fees and rewards – are likely to be more important in the long run. Consider signup bonuses more as a tie-breaker between cards with otherwise similar terms than as a primary reason for choosing a card.

So how do your credit card habits stack up against those of your fellow credit card users? This survey revealed both good and bad habits of credit card users, offering a reminder to make sure your habits aren’t costing you.

Richard Barrington
Cardratings Contributor

Richard has over 30 years of experience in financial services, including 23 years with the investment management firm Manning & Napier Advisors, Inc., where he led the Marketing Group and served on the firm’s Investment Policy Group and Executive Group. Over the years, Barrington has...Read more

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