Credit Cards with Zero Percent Interest Might Interest You

Credit cards can be a wonderful tool to help you manage your money. They can also quickly pull you into a bad place financially. It is all in how you use them. You probably have some concept about a credit card, but you might not understand the details of how they work. This is usually what helps get people into trouble with credit cards. There are some details you should understand before you begin to use a credit card. You may have heard the term zero percent interest, but do you know what that means? Worry not, because I am going to explain the details behind zero percent interest in this article so you understand what it means. This also helps you decide which zero percent interest credit card is best for you.

What Is A Credit Card?

Before we can begin talking about zero percent interest credit cards, I want to make sure you understand what credit cards are. I am sure you know that a credit card is a piece of plastic that you carry around in your wallet. You also know that you can buy things with it. You can also use your credit card online. Each time you use your credit card, you agree to pay back the money you use. You are also agreeing to pay any interest or fees you may have.

The credit card is typically backed by a bank. That means a bank is allowing you to borrow money with your promise to repay it. It is similar to a line of credit. The bank agrees to let you borrow up to a certain amount of money. You can use that amount all at once, but you can choose to only use a portion of it. However, whatever amount you use is due within 30 days. If you do not pay the amount in full, you must pay interest on the money you used but are not repaying right away.

The credit card company always requires you to make a minimum payment. If you do not pay at least that much, you are subject to additional fees. Not paying the minimum amount impacts your credit score. You want to make sure you pay at least this much. Ideally, you would pay off the whole amount each month, but many of us cannot do that.

The way a credit card work is like this:

The credit card company gives you a limit of $5,000. If you have poor credit, your limit is going to be lower, but more on that later. That means you can use the $5,000 any way you want. You use $400 of the available $5,000. That means you now have $4,600 available and in about 30 days, you owe the bank $400. If you pay the full amount, you have no interest charges and your available credit is back up to $5,000.

However, if you only pay $200, that means your available credit is $4,800 and you have interest charges for the $200 you did not pay. Since you have good credit, I will say the interest rate is 10 percent. That means you must pay an additional $20, so your new balance due is $220 and your available credit is $4,780.

Why Is Zero Percent Interest So Appealing?

When looking for a credit card, you should always try to find one with zero percent interest. These types of cards are appealing because you are not charged interest for a set period of time. Typically, the credit card company gives you zero percent interest for 9 months or a year. This means for the next 9 to 12 months, you are not charged interest for any month that you cannot pay your balance in full. The only money you owe during that time is the money you charge. This is a great way to make large purchases, as long as you know that you can pay off the purchase before the time period runs out.

The downside to this type of credit card is if you do not pay off the entire purchase during the promotional time period, you are charged interest on the entire cost of the item, even if you have paid for some of it. Another downside is you could be teaching yourself bad habits by not paying off the full amount every month. You can get used to carrying a balance from month to month. That is fine when you are not being charged interest. Once that interest starts accruing it is an entirely different situation.

The Top Credit Card With Zero Percent Interest

With all this talk about zero percent interest credit cards, I am sure you are interested in finding out some of the best available. I mean, what is the point in knowing you have these options without knowing what they really are, right?

I am going to list some of the best options available to you and give you just a little bit of information about them. Remember, some of these offers are subject to your credit score. Just because they are available does not mean you qualify for them.

Chase Freedom Unlimited

chase freedom unlimited card

This card gives you 15 month with 0 percent interest. Yes, 15 months. This is one of the longest periods of time you will find. In addition to 0 percent interest, this card has no annual fee. It also offers unlimited cash back rewards of 1.5 percent, which do not expire. There is no minimum for redeeming the cash back. If you spend more than $500 in your first 3 months after opening the account, you get a $150 bonus. For these reasons, if you qualify, this could be the best first credit card you can find. You should be aware that after the promotional period ends, the interest rate may be between 16.74 and 25.49 percent.

Discover It Cashback

discover it cashback card

Another card that offers zero percent interest is the Discover It Cashback card. This card offer 0 percent interest for 14 months. After that period, you can expect an interest rate of anywhere between 13.49 percent to 24.49 percent. There is no annual fee for this Discover Card. This card offers you 5 percent cash back at various places that change each quarter. They can be places such as Amazon or various gas stations and grocery stores.

You must activate these offers, but Discover also offers unlimited 1 percent cash back on every other purchase. That is automatic and you do not have to activate this cash back. The best part of this card is that Discover matches all of the cash back you earn for the first year. There is no limit on how much Discover matches. You can redeem any amount at any time and they do not expire.

CapitalOne QuickSilver Cash Rewards

CapitalOne QuickSilver Cash Rewards card

This credit Card is another card that offers zero percent interest for 15 months. After the 15 month period, the interest rate may be anywhere between 15.74 percent to 25.74 percent. This card also offers zero percent interest on balance transfers for 15 months. There is no annual fee with this card. CapitalOne also offers 1.5 percent cash back on all purchases, with no limits. There are no specific categories and you do not need to activate any offers. The cash back does not expire and there is no limit to how much cash back you earn. This credit card also offers a $150 bonus after you spend $500 within the first 3 months after you open the account.

BankAmericard

bank of america card

One last card that you might want to consider is the BankAmericard credit card offers zero percent interest for 18 billing cycles. After the end of 18 billing cycles, the interest rate goes up to anywhere between 14.74 to 24.74 percent. This card does not have an annual fee. This card does not penalize you for paying late. Making late payments does not negatively impact your credit score. This credit card does have mobile banking, but does not have any other promotional offers.

Key Terms I Should Understand

In the section above, I mentioned a few terms that you may not fully understand. These are important terms when it comes to credit cards and proper usage of them. I want to take a few moments to give you some detailed information about them.

I want to start with your credit limit because this is the basis for your credit card use. This is the full amount that the credit card company allows you to use. This amount is typically dependent on your credit score. The lower your credit is, the lower your credit limit will be. This amount can change over time, if you use your credit card wisely. If you make regular payments on time and pay off the full amount, or most of the among, the credit card company will increase your credit limit.

The available balance is the amount of credit available for you to use. The bank gives you a set credit limit and as you use that amount, your available balance goes down. When you pay the credit card, your available balance goes up. I will give you an example in simple numbers. Your credit limit is $1,000. You spend $200 of it. That means your available balance is now $800. When your credit card bill comes, you owe $200 because that is what you used. You pay the entire amount of $200 and now your available balance goes back up to $1,000.

All credit card have some type of fees. You should be aware of them before you begin to use your credit card. Your credit card may have an annual fee. This is an amount they charge you simply to use their credit card. Some of those fees are fairly high and are not worth it, but you must understand what the fee is and why. There are plenty of credit cards that do not charge an annual fee. You should look for those first. Credit cards charge other fees such as a late fee when you do not pay the minimum balance on time. Credit cards also charge a fee if you go over your available balance. Many credit cards will deny the sale if you do not have enough money available, but others will no. You will get hit with a fee if you go over the limit.

Interest is where it gets a little more difficult. Most credit cards have an interest rate. It varies across credit cards and your credit score. In the examples I described above, I talk about simple interest, which is the interest you owe on the money you used this month. However, there is something called compound interest. This is paying interest on what you already owe. This is the way the credit cards get out of control.

I am going to use numbers to highlight what I mean, but keep in mind these are made up numbers to help the explanation. You owe $150, but can only pay $50. Interest is charged on $100. 10 percent interest is added, which means you now owe $110. For the next month, interest is determined on the $110, which is the $100 you used plus the interest on it, so now, you owe $11 more, bringing your total amount due up to $121. These numbers are only if you do not use your credit card during that month. This continues to happen each month until you pay your balance in full.

Some credit cards offer incentives such as zero percent interest for a set period of time. That means during that period of time, no interest is charged for money that you carry over from month to month. This is appealing because you do not have to pay off the balance in full to avoid interest charges.

What Is The Difference Between Secured And Unsecured Credit Cards?

You may have heard the terms secured and unsecured credit cards. Typically, secured credit cards are for those with bad or little credit.

A secured credit card is great for someone who needs to build up credit. It could be because you are young and you do not have any credit yet. Or it could be because you have gotten yourself into a tough spot and your credit score has dropped. No matter the reason, this type of card helps you build up credit. You should know that you will not find a zero percent interest secured credit card. These types of cards work a little differently.

They use your own money to help secure them. You give the bank a deposit of a specific amount. In some cases, your credit limit is the amount of your deposit. It may be $500. You can borrow up to that amount of money. Each month, you make regular payments on your credit card, just as you normally would. Over time, as you continue to make timely payments and make smart decisions with your credit card, your credit score improves. Then the bank increases your credit limit and gives you back your deposit.

An unsecured credit card has none of your own money backing it. You do not have to give the bank a deposit. You just have to have good credit. A typical credit card is considered unsecured.

Does My Credit Matter?

Yes, it is important for you to learn now that your credit always matters. It matters in many different aspects of your life. However, for purposes of this article, I am going to explain how your credit matters for credit cards. The type of credit card and credit limit you receive is based on your credit score. Typically, only those with good to great credit will qualify for a zero percent interest credit card.

If you have very good credit, usually a score of 740 or more, you can qualify for just about any credit card with the best features, incentives, and interest rate. A good credit score of somewhere between 670 to 739, means you can qualify for most credit cards with some fairly good rewards and promotions such as zero percent interest. When you have a credit score in this range, it means that you have a credit history of three or more years and no late payments. Credit card companies also look at how many other debts you have to help determine if you can handle credit card debt.

When your credit falls between 580 to 669, you may start to have some challenges getting approved for a credit card. It is not impossible, but now you are falling into category where you need to do more research about credit cards. It always helps to know your credit score before you begin to look for a credit card. This helps you understand what type of credit cards for which you qualify.

Can I Get A Credit Card With Bad Credit?

Yes, you can get a credit card with bad credit. However, it may be more difficult for you to obtain one. You may have a low available credit. Also, you may need to obtain a secured credit card, depending on how bad your credit score is. You most likely will not qualify for a zero percent interest credit card if you have bad credit.

If you have bad credit, you should be aware of some other points when it comes to credit cards. You should make sure to get a free copy of your credit report. Remember, you are eligible for one free copy per year. You should get one and review it. The first things you want to do is make sure it is correct. If you find errors on your credit report, you should fix them immediately. This helps to improve your credit score. After you do this, take a look at your credit score and understand it. You should also begin to take measures to improve your credit score. You should make sure you make all payments on time and work to reduce your debt.

After you have taken these steps, you should do some research to find the right credit card for you. There is a best credit card to get with bad credit because it is geared towards helping you improve your credit score. You may have to obtain a secured credit card until you are able to improve your credit score. A secure credit card is one that you give the credit card company a deposit to back your card. Typically, your credit balance is the same amount as your deposit.

What Is The Best Way To Use A Credit Card?

I may have mentioned it a few times already, but a credit card is a great money management tool as long as you use it properly. There are a few items to keep in mind when you are using your credit card to help you stay on track. If you can follow a few tips, you can keep yourself from drowning in credit card debt.

  • Pay off your full balance each month. I know this can be challenging, but if you only use what you can afford to repay, you will be able to pay your credit card bill each month.
  • Budget yourself. One of the best ways to stay on track to pay your credit card in full each month is to have a budget. I will go in more detail later in this article.
  • Auto pay. You can set up so that you automatically pay a certain amount to your credit card each month. You should make this amount pays more than the minimum balance.
  • Look for zero percent interest. The best kind of credit card you can have is one that does not have a balance. That way if you are not able to pay off your balance each month, for a short time you will not have interest charges.

Why Should I Create A Budget?

I mentioned earlier that a good way to use credit cards is to pay the balance each month. I also said that the best way to do that is to create a budget so you know how much you can afford to pay each month. It is impossible to stay within your budget, if you do not know how much you can afford to spend. The average credit card debt per person continues to rise each year. The best way to stay on top of it is not to over spend.

Creating a budget is fairly simple as far as writing down all the numbers. It may not be simple for you to stick to, but that is another issue. The fastest way to create a budget is to write down your income in one column. In the next column, write down all of your expenses. Do not leave anything out. This is not the time to hide things. You would only be hiding them from yourself and it would serve no purpose. After you have written everything down, add up both columns. Then you subtract your expenses from your income and hopefully, you have a positive number. That is how much money you can spend each month after you pay all of your expenses.

Should I Save More?

It is always a good idea to save as much money as you can. You never know what is going to happen. There always seems to be some unplanned expense. You want to have money for emergencies, but you also want to have money for your future. The best way to save more money is to cut expenses. Now that you have all of your expenses written down, it is fairly simple for you to see where you spend money. It may be surprising to you to see how much money you spend and where you spend it. Most of us do not even realize where our money goes. Creating a budget helps you answer that question. Once you see where it goes, you can begin to make some changes and cut spending.

Now is the time to take a critical look at your expenses. Put your expenses into categories. Create a category of must have expenses. These are thing such as your mortgage or rent. Your car payment and utilities and food should go here. Keep in mind that just because these are must haves, it does not mean you cannot reduce spending in these areas. Take a look at what is left and see what spending you can cut.

Conclusion

Credit cards can be the best tool you have, or they can be your worst enemy. It all depends on how you use them. When used properly, credit cards provide flexibility with your spending. When used poorly, they can drag you into a vicious cycle of debt. Use them wisely.

Credit Card Statistics That Will Shock You: Data 411

Choosing the right credit card is like choosing the right automobile, or your favorite restaurant. It won’t be the same for everybody, and what’s important to you often changes over time as well. Sometimes your circumstances evolve; sometimes your goals aren’t the same as they were before. Maybe you’d simply like to have several different options. That way you can choose each time based on the needs of the moment. Credit card statistics can come in handy to help you choose.

Credit Card Statistics – All You Need to Know

This is the 21st century, and finding the right website to compare credit cards isn’t that difficult. It’s knowing what you want and need from a card that can make things tricky. Let’s walk through some credit card statistics and some of the most common options presented on any credit card comparison chart and see if we can help make your choices a bit more clear.

It’s not about me deciding what’s best for you. Anyone claiming they can do that is either delusional or up to something. Instead, it’s about making informed choices about credit cards or any other form of loan or debt you choose to utilize. It’s about using credit card statistics to better decide what will help you move closer to both your short-term and long-term financial goals.

What’s Your Credit Score?

One of the biggest factors in considering what sort of credit card makes the most sense for you – and possibly which options are even available to you – is your credit score.

Most of us have a vague idea what a credit score is. But too many Americans aren’t clear on where it comes from or whether or not we have any control over it. Your credit score is a 3-digit number which acts as a “snapshot” of your overall credit worthiness. Unlike your full credit report, a credit score doesn’t tell lenders who you’ve owed or why your score is what it is. On the one hand, it’s a very limited picture of you as a borrower. On the other, it doesn’t require extensive research or consideration and offers a simplified way for lenders to quickly gage whether or not someone is a good risk.


The most common credit score scales utilize a range of 300 – 850, with higher numbers reflecting a stronger credit history. Many credit card companies use this as a primary determinant of what sort of card you qualify for – the interest rate, the credit limit, and possible additional benefits and rewards.

What Is a FICO Score and How Does It Impact My Credit Card Options?

The original three-digit “credit rating” is the FICO score, named for the company which created the system. Here are the general categories indicated by your FICO score and likely impact on your search for the right credit card.

You can learn more about what goes into computing your FICO score in this piece from CNBC. It has graphs and everything.

What Is a VantageScore and How Does It Impact My Credit Card Options?

A very similar credit score system also commonly referenced by lenders is your VantageScore. This system was developed by the three major credit reporting bureaus – Experian, Equifax, and Transunion. It’s computed slightly differently than your FICO score. But the basic idea and outcomes are close enough that we don’t always bother distinguishing between the two. If you’re weighing your options using a credit card comparison chart or other website to compare credit cards, however, it may be helpful to notice which scale is being used so you can better identify your credit card options and better understand which credit card statistics best apply to you.

Credit Scores and Your Credit Card Choices

There are a few things these numbers tell us, and a few related credit card statistics worth noting along with them.

First, according to the most recent FICO figures (above), 67% – over two-thirds – of Americans have a “Good” credit rating or higher. If you prefer to use the VantageScore model, 61% have a “Good” rating or higher, which is still an impressive majority.

Second, Americans as a whole are trying to pay down their card balances. The first quarter of 2019 saw a $22 billion decline in credit card balances after a lengthy period of gradual increases. Balances are still pretty high, however, depending on whose credit card statistics you consult. Experian, one of the three major credit reporting agencies, figures an average credit card debt of $1,760 per person (counting only adults with a credit history). The Federal Reserve of New York computes an average balance of just over $1,900 for every American with a store-brand credit card of some sort.

Third, not everyone is succeeding at paying down their credit cards. Other methods of computing outstanding credit card debt show much higher average balances – over $5,000 average credit card debt per cardholder, by some reckonings. This strongly suggests that while some Americans are paying their cards down or off, for every two or three who do, someone else’s balances are spiraling out of control. Eliminate Americans with little or no balance from the mix, and suddenly our credit card statistics change dramatically.

Your Ultimate Guide to Credit Card Refinancing

There’s an old joke about three guys sitting in a bar. Suddenly, Bill Gates (or Warren Buffet, or any other figure famous for being wealthy) walks in. They begin thanking him profusely and offering to buy him drinks. When he asks why, they explain that before he came in, their average income was around $52,000 a year. Now that he’s there, the average income in the room is closer to $25 billion, so of course they can afford to get the first few rounds.

That’s why average credit card debt can seem so low if measured across every adult, or even every adult with a card. It’s much higher if we consider only adults with a balance. Credit cards are tricky – those who use them responsibly can derive great benefits from the flexibility they offer, while those who don’t quickly find themselves in trouble. You should make every effort to understand the pros and cons of credit cards before signing up! In this case, looking at credit cards statistics can tell you a lot.

Fourth, at the same time, the average credit limit on our collective cards continues to rise. (There is a rise of average credit score, topping 700 in the past year, which I suppose could be related.) It remains to be seen how this plays out, but credit card statistics offer at least some positive news in the face of largely troubling figures for student loans, auto loans, and other forms of debt.

I say some positive news because not all of the latest credit card statistics are positive. That brings us to…

Fifth, Americans who are behind are getting further behind. The rate at which 30 – 60 day delinquencies became 90+ day delinquencies has been steadily creeping up since 2017. Obviously, this is the sort of thing which severely damages your credit rating. It also impacts future efforts to secure an auto loan, a mortgage, or any other sort of personal loan. While you don’t want to only make minimum monthly payments when it comes to your credit cards, you should prioritize at least making those minimum payments to avoid making things even harder for yourself down the road.

Since we’re on the subject, here are a few other common credit card mistakes you should avoid. I want you on the right side of those credit card statistics!

How Can I Improve My Credit Score (and make it easier to get a good credit card)?

First, pay your bills on time.

I know this seems flippant, and it’s not always easy. If you don’t have the money, you don’t have the money, right? If that’s the primary reason you’re late on your credit card payments and other monthly obligations, you should seriously consider revisiting your household budget. It’s possible a bill consolidation loan or other restructuring of your debt might help you “reboot” a little. You might even find part of the solution in refinancing your home.

But severe financial difficulties aren’t always why we damage our own credit. How often are we late on payments because we don’t maintain a clear budget? Or we just lose track of things? We’re busy, and doing the bills, like balancing the checkbook, feels depressing. I get it, but it’s time to adult, my friend! Timely payments aren’t just the right thing to do – over time they establish a credit history which gives you more choices and access to funds in the future. You may never plan on borrowing beyond your house or car payment, but life is full of surprises. Wouldn’t it be nice to have some options if things don’t always go as planned?

Maybe you figure it doesn’t matter at this point because your credit history is too messed up. Maybe it is. And maybe it doesn’t matter right now. But in six months you could have a better track record than you have right now. In two years it could have already demonstrated an amazing turn-around. The key to getting somewhere is to choose the right direction and start.

How about today?

Second, don’t take out loans or cards you don’t need.

Please understand, there’s no need to be afraid to shop for the right loans or right cards. Sometimes a bill consolidation loan or a new credit card with a better interest rate can be game-changers! But make those choices because they’re the right choices for you. Don’t try to game the system based on some “quick-fix” plan you read about online.

Third, avoid maxing out your cards if you can.

Use them if you need to, but it’s better to have “available credit” in the mix. That said, if you have the self-discipline to avoid unnecessary debt, don’t close or destroy cards you’ve paid off. Put them in your safe or keep them somewhere inconvenient (but secure), but they can remain open.

From a “credit history” standpoint, the ideal is to use your available credit reasonably here and there, then pay it off consistently, even if not immediately each month.

Fourth, always be on the lookout for a chance to consolidate.

It can be a game-changer to eliminate multiple monthly payments with one lower-interest card or a small personal loan. You don’t want to get into the habit of regularly juggling debt from one source to another, but as you make your payments and improve your credit rating, your options improve. Within a year or two, you may qualify for a lower-interest card or a small personal loan from your local bank or credit union or a legitimate online lender. It’s the same idea as refinancing your home at a lower rate; it’s just that the amount is (hopefully) smaller and the process far less tedious.

 

Finally, check your credit reports and address any disparities or incorrect information.

It’s not always easy to make this happen quickly, so don’t wait until you’re buying a house or trying to start a business. Better to handle that as soon as possible. Check your credit – like, NOW!

Small Business Credit Card Statistics

Of course, individuals aren’t the only ones using credit cards for financial flexibility. Credit cards are one of the many methods used by small businesses to purchase essential inventory, keep miscellaneous expenses organized, or otherwise grow their operation. Sometimes they’re the primary means by which a new business establishes a good credit history.

Although small businesses only account for about 4% of total credit card use in the United States, that’s still around 14 million cards. Not surprisingly, small businesses tend to have higher credit limits and spend more with their plastic revolving funds. Over 15% of total dollars purchased with cards is by small business. That’s not counting, of course, dollars spent on personal credit cards as part of individual efforts to open or build small businesses.

They’re not always the best form of small business loan, but credit card statistics say they are used effectively and often in the small business world. It’s worth keeping in mind that not every small business is a repair shop or diner these days. People are running bed-and-breakfasts, driving strangers around town, freelancing their writing or graphic design, and selling stuff online. The right credit card makes each of these easier, and sometimes safer or more productive.

Still, if you’re an entrepreneur looking to start or expand your small business, explore your loan options before simply whipping out the plastic – no matter how much credit you may have. Credit cards provide a wide range of conveniences for small business owners just like they do individuals, but that doesn’t mean they’re always the ideal solution if your primary need is substantia financing or a long-term business loan. They can charge higher fees and don’t always offer terms as favorable as personal credit cards, which throws a wrinkle into the pros and cons of our overall credit card statistics.

I’m not saying don’t do it; I’m just saying make sure it’s an informed decision.

So What Credit Card Should I Get?

I wish I could tell you. I mean, I wish I knew – and I’d tell you if I knew. But the right answer for me may not be the right answer for you, and the right answer for you may not be the right answer for the next guy. Sorry about that! The best thing you can do is compare credit cards and several aspects of them so you can make the best decision.

So here are some things to consider as you look…

Maybe all you need is a credit card.

What I mean is, maybe all that matters for you is the primary function of the card. Can you buy stuff with it, then pay it off over time? Is the interest rate reasonable? Are there any hidden fees or scary wrinkles of which you should be aware?

For me, personally, all I’m looking for in a credit card is a decent interest rate, low fees, and straightforward terms. It’s a bonus if I can get it with a Dallas Stars logo or Beatles album artwork, but not essential. I don’t care about travel points or rewards or getting concert tickets ahead of the general public or whatever. When I use my cell phone, it is primarily to call people or occasionally text. I use my laptop primarily to type documents and check email. And I use my credit card to buy stuff and pay it back over the next several months.

Do you want to pay an annual fee?

It sounds like a silly question, doesn’t it? Given the option, most of us would probably say no thanks – I’ll pass on the yearly fee if given a choice. As you’d probably guess, I won’t use a card with an annual fee. Period.

So why do others choose that option?

Because cards with annual fees offer to offset that cost with their various rewards programs. You earn travel benefits or cash back or whatever else. If the annual fee is $99, but you save $3,000 in hotel discounts and rental car specials by using the card for everything, that might be a pretty good system for you.
But be honest with yourself. Avoid aspirational card-shopping. In the same way, it’s usually a mistake to buy clothes in the size you wish you were instead of the size you are, it’s usually a mistake to sign up for a card designed for the lifestyle you wish you had instead of the life you actually live.

What kinds of rewards matter to you?

If you opt for a rewards card, what’s realistic for you? It’s hard to go wrong with cash-back, as long as you use the card for purchases you were going to make either way and you pay off the balance in a reasonable time. (Don’t play the game with yourself where you buy more than you can afford but justify it because you’re earning 5% back. You’ll lose more than that in interest in a few months. Not to mention the late fees you may be setting yourself up for by going into the deep end too quickly.)

If you think a rewards card might be right for you, read the small print. I know, I know… But seriously, that’s the only way you’re going to know if the specifics really make sense for your circumstances and preferences. I realize the TV ads and mailers make it sound so obvious. Who wouldn’t want 5% cash back on every grocery store purchase?! But if it were really such a no-brainer, why do they have to spend money advertising what a great deal it is?

And no, I’m not saying it’s a bad deal. I’m saying, read the specifics. Ask questions. Keep in mind that while there are plenty of situations in which you can come out ahead AND the lender makes a reasonable profit, other rewards programs are like mail-in rebates: they’ll honor them, sure… But while they’re hoping it motivates you to buy the product, they’re also hoping you don’t actually mail in the rebate.

Of course we’re happy to help you choose the right credit card for you, but not by telling you what to do. We’ll get a little information and help you narrow down your options. We’re all about breaking down credit card statistics and reminding you of things to consider; you want magical answers, try a fortune cookie.

(Great. Now I’m craving sesame chicken while I type. Should have chosen another way to make that point, I guess…)

Oh, and by the way, we at Loanry can help you with choosing a card. Besides these articles about everything you need to know, we can also connect you with reputable card companies. Our partner Fiona selected them for you. See below:


What cards are other people happy with?

That one’s a little easier, although it still won’t give you that magical answer you’re looking for.

J.D. Power did a study about customer satisfaction with a variety of credit cards, both in terms of features and specific brands. Here were a few highlights:

  • The number one reason (47%) customers switched cards during the 12 months analyzed for the study was for a better or different reward program.
  • Now that more card users are paying attention to rewards programs, card-issuing banks are sometimes dialing  back the programs. This isn’t always to reduce benefit to users; sometimes it’s because users are only using certain benefits, so issuing banks focus on those.
  • Customers who actually understand the rewards program indicate greater satisfaction with their cards than customers who don’t. And over a third of them don’t. This is a problem for reward card-issuing companies for at least two reasons. First, confused and unhappy customers are more likely to switch cards. Second, happy customers who understand the rewards programs spend an average of over $300 a month more with the card.
  • One of the favorite perks customers report about their credit card use is getting free credit score reports. Discover, in particular, has done an impressive job promoting this feature. You’ve no doubt seen the commercials with two people on the phone with one another, not quite twins but clearly letting us know that “they’re just like me.” (Since the free credit score perk is such a winner, it’s probably no surprise that the J.D. Power study found Discover to have the highest customer satisfaction for the time period they studied.)
  • Older customers are being won over to paperless (“digital”) billing. It’s not surprising that younger consumers embrace this form of monthly accounting. But customers over 40 are not only switching to this option more and more, but it seems to increase their satisfaction with the card itself. Go figure.

Credit Card Statistics: How Are Americans Using Their Cards?

Finally, let’s look at how people are actually using that little plastic rectangle (with gently rounded edges) in their wallets or purses. Experian did a survey recently which gave us some interesting results. Keep in mind these are self-reported, and respondents could choose more than one category (so the totals are higher than 100%).

  • 68% (over two-thirds) reported they used their cards to buy the everyday stuff they needed. This suggests they could have purchased the same items with other forms of payment. But that plastic offers enough convenience to make it a regular choice. While the survey doesn’t establish this, it’s likely that many of these are the same folks who pay most or all of their balance every month.
  • 42% (just over 2 in 5) reported they use their cards specifically because of the rewards program associated with them. Note that this doesn’t necessarily mean that’s a good idea or a bad idea. Just that it’s an effective idea from a credit card marketing standpoint.
  • 37% (over one-third) use their card as an emergency cushion. This could include unexpected medical bills, car or home repair, or any other unanticipated expense. While no one likes unexpected problems, they’re one of the biggest reasons to have a credit card or two (with funds available) – just in case.
  • 32% (almost one-third) report they’re using their card(s) to improve their credit rating. Secured cards (“pre-paid” cards) are particularly effective for this if you have bad credit. But any credit card can help you build or rebuild credit simply through responsible use. Just making your minimum payment each month quickly establishes you as a better credit risk than you were a few months or a few years ago. Of course, not making that minimum payment each month does the opposite, so be realistic.
  • 31% (just under one-third) say they use the card for extra things they want. This isn’t inherently bad, but I confess it makes me a little nervous. I suppose it sounds awfully close to “impulse buying” or otherwise living slightly beyond our means. Perhaps I’m reading my own poor past choices into the response. But I’d be careful about thinking of credit cards in this way on a regular basis.
  • 16% told Experian they used their cards to pay off other debt. As we’ve discussed before, this can be a great strategy, but make sure you understand the pros and cons of personal loans vs. credit cards.

Conclusion

Hopefully, it’s helpful to know a few general credit card statistics. It can be enlightening to see how our choices and experiences compare to others. But in the end, the “best” card or the “right” card is the card that’s “best” or “right” for you.

Check out options through your local bank or other financial institution. Read through the terms of those rewards or that introductory interest rate. But before you make a decision, let us connect you with a few other options as well. It’s the 21st century – you shouldn’t be begging for credit; lenders should be working for your business. Then, you decide what you want to do. If you have questions before you even go that far, let us know. We’re always here to help.