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Credit cards are extremely convenient, but they also have the potential to create serious debt problems for consumers when they’re not used correctly. According to the Federal Reserve Bank of New York, revolving debt topped $1 trillion at the end of last year, and most of that debt comes from credit cards. Experts warn that this could spell trouble for consumers if the economy takes a turn. But at least for now credit card delinquency rates are falling.
So, to find out what’s really true when it comes to consumers and credit cards, Debt.com and Money Talks News partnered up to conduct a nationwide survey of over 4,500 U.S. adults to ask about their perspectives on credit cards and credit card debt. Out of the responses, two risky bad credit habits stood out:
Below you can find the full results to all the questions from Debt.com’s 2018 Credit Card Survey.
Jump to one of these sections:
Following the Great Recession, some experts predicted that credit card use would become less popular, especially among Millennials. However, according to our findings, most Americans still believe in the power of their plastic.
|Do you use credit cards?|
The good news is that when consumers shop for a new credit card, most focus on the right thing: low interest rates. A low rate makes it easier to pay of credit card debt because more of each payment goes to elimiante principal, rather than accured interest charges.
|What is the main feature you look for when you shop for a new credit card?|
|Lowest interest rate||58.11%|
|Most cash back||20.28%|
Most experts recommend that you really only need 2-3 credit cards because any more than that creates too much potential for debt problems. However, Debt.com’s findings show that the marjority of people may have more accounts than they really need.
|How many credit cards do you have?|
|More than 12||2.48%|
While many Americans have more cards than most experts would recommend, that doesn’t mean that they’re actively using all those cards. In reality, only a few cards are actively used, even when a person has a wallet full of plastic.
|How many credit cards do you actively use?|
|More than 12||0.28%|
Credit cards don’t just serve one purpose, and as a result, credit card use has become an integral part of our daily lives. In some cases, they may be used strategically. But unfortunately, they often get used to cover daily expenses and emergencies. This type of use can be dangerous because unexpected expenses always inevitably arise.
|What do you use your credit cards for? Check all that apply.|
|Other travel costs||45.30%|
|Bills / covering budget gaps||38.83%|
According to our friends at ValuePenguin, the average credit card debt per household is $5,700. But if you only at households that carry credit card balances, that average jumps $9,300. But according to Debt.com’s results, nearly two thirds (66%) of people we polled had balances of less than $5,000 and almost 40% had a balances of $1,000 or less.
|What is your total current credit card debt?|
According to CreditCards.com, the national average credit card interest rate usually fluctuates between 16-18% APR. But if you use reward credit cards, your rates may often be over 20% APR. At the same time, if you have low interest rate credit cards, then your average creidt card rates could easily be in the 13-15% range. What’s suprising is the number of respondents that reported their average rate was even lower than that. Either these respondents have extremely good credit and negotiating skills for getting lower rates, or this may show that many people underestimate how much credit really costs them.
|What do you think is the average interest rates on your credit cards?|
Hitting your credit limit is bad for your debt and your credit score. In general, utilizing anymore than 30% of an available credit limit is bad for your score. Ideally, you really don’t want to carry balances over month to month. But we were pleased to see that almost a third of survey respondents never or rarely get close to their credit limits.
|Do you ever hit the credit limit on your credit cards?|
|I never or rarely hit my credit limits||64.20%|
|I have hit a limit in the past year||12.57%|
|I have hit a limit in the past 6 months||4.98%|
|I have hit a limit in the past 3 months||9.95%|
|I hit my credit limits every month||8.30%|
Balance transfer credit cards allow a consumer to consolidate existing credit card balances on a new card with lower APR. Often, these credit cards offer 0% APR introductory periods where you can pay off debt interest-free.
|Have you ever used a balance transfer to consolidate debt?|
While only more than a third of respondents have used a balance transfer, the good news is that the majority use them correctly. That means paying off the balance in full before the end of the 0% APR teaser rate.
|Did you pay off the balance transfer before the teaser rate expired?|
When it comes to using credit strategically, there’s a sweet spot when it comes to shopping for credit. You don’t want to constantly shop for new cards because it creates a risk for too much debt. On the other hand, you don’t want to use your cards for decades without shopping around. You could miss out on new reward programs and features. But at least with our respondents, shopping for new credit is a rarity.
|When was the last time you signed up for a new credit card?|
|In the past 2-6 months||11.08%|
|In the past 7-12 months||11.72%|
|In the past 13-18 months||11.92%|
|It’s been over 2 years||23.05%|
|It’s been over 5 years||35.07%|
Credit monitoring services allow consumers to track changes in their credit score and review their credit reports more regularly. There are paid services, like LifeLock, and free services, like Credit Karma. But do people really use these services to strategically build credit?
|Have you ever used a credit monitoring service?|
A 2013 FTC study found that one in four credit reports contain an error and one in five have an error that would hurt a consumer’s credit score. That’s why it’s so important to review your credit often. Unfortunately, most people seem to trust the bureaus to get it right.
|Do you believe that the information in your credit report is accurate?|
With free annual credit reports through annualcreditreport.com, consumers can review their credit without any strings attached once per year. And the majority of the people we polled stay on top of their credit.
|When was the last time you reviewed your credit report?|
|In the past six months||50.26%|
|In the past year||20.41%|
|In the past 2 years||11.43%|
|In the past 5 years||12.14%|
Often the biggest problem with government mandated programs is that consumers don’t know they exist. It’s the reason that the Government Accountability Office says that over half of student loan borrowers may be overpaying. But when it comes to knowing about free credit reports, most consumers are in the know.
|Do you know that you can receive a free annual credit report guaranteed by federal law?|
Debt.com partnered with Money Talks News to poll 4,462 U.S. adults online using SurveyMonkey. The survey was open from June 19, 2018 to July 9, 2018.