According to a recent CNN Money article, "About 16% of consumers ages 18 to 29 didn't have a single credit card by the end of 2012 -- up from 8% in 2007, according to data that credit score provider FICO collected from the credit files of millions of consumers."
It goes on to say, "As a result, credit card debt has declined by about a third among this age group -- from an average $3,073 to $2,087 per person."
Personally, I think that this is a relatively good thing. While I have nothing against credit cards, much like guns, placed in the wrong hands, they can be dangerous.
Our credit card situation
The statistics laid out by the CNN Money article come close to our family's situation. My wife and I -- although a few years older than the 18-29 age range (I won't say just how many years) -- only have one credit card between us.
Yep, you heard that right. Just one credit card. And you know what? We don't even use it that much, and we ensure that we pay its balance off each month. Sure, after we graduated from college, we used to have all sorts of store credit cards as well as each having three to four credit cards. However, over the years, I began to realize that these cards were largely unnecessary and got tired of having to keep track of them all. Therefore, we cancelled them and cut them up…all but one.
How we spend
So if we only have one credit card, how do we spend money?
Well, it's really quite simple. Did you know that some people (like us) still use checks? Yep, I know. It might sound like I'm yearning for the 1980s here (maybe I am), but checks still seem to work just fine for us. And call me old fashioned, but even that funky green stuff called cash works okay too.
Not only do we find that this makes it simpler to track and gauge our spending, but it also helps us spend less. Like casinos using chips to get players to spend their cash more freely, credit cards can kind of act like those chips, keeping our cash out of sight and out of mind and in the process making it easier to spend with a single swipe rather than having to fork over our hard-earned money.
What we save in the process
Sometimes people tout the benefits of credit cards -- things like membership points, user benefits, and simplicity of use. And I'll agree that used in the right ways, credit cards can have their advantages. However, according to an infographic on creditloan.com entitled, "A Lifetime of Debt: The Financial Journey of the Average American", here are some interesting statistics:
- "Interest rates on department store cards can be as staggering as 33%"
- "The average rate for standard bank credit cards is around 19%"
- "The average undergrad has $3,200 in credit card debt"
- "3/4 of American households have multiple credit cards"
- "The average balance per household in America with credit card debt is $10,637"
- "By age 60, the average American has 5 or more credit cards"
And the kicker…
- "Over a lifetime, the average American will pay over $600,000 in interest"
According to creditcards.com, the average credit card interest rate was hovering just under 15 percent in April of 2013. And if the average balance per household in America with credit card debt at over $10,000, this means we're saving at least $1,500 a year on payments interest alone, which is well worth the trouble of not having multiple credit cards.
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The author is not a licensed financial professional. The information provided in this article is for informational purposes only and does not constitute advice of any kind. Any action taken by the reader due to the information provided in this article is solely at the reader's discretion.
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