Credit cards and access to them are not evenly spread evenly across America. Age, race and gender often play a role in whether we obtain credit cards, and how we use them.
Minorities are less likely to have access to credit than white Americans. In 2013, 20 percent of whites did not have access to a credit card compared with 47 percent of African-Americans and 30 percent of Latinos.1
African-Americans and Latinos are less confident that they will be approved for credit than whites. In 2013, 67.7 percent of whites were very confident or somewhat confident that they would be approved for credit, compared to 45.3 percent of African-Americans and 53.7 percent of Latinos. While 19.5 percent of whites were not confident that they would be approved for credit, 28 percent of African-Americans and 30.7 percent of Latinos were not confident.1
Credit scores among racial and ethnic groups
One reason for the lack of credit confidence among minorities could be that minorities tend to have lower credit scores than white Americans. In 2013, more than 64 percent of white American borrowers had a FICO score of 720 or higher compared with 41 percent of Latino borrowers and 33 percent of African-American borrowers.2
Minorities are also more likely to have insufficient credit histories to generate a credit score. A report released in 2015 by the Consumer Financial Protection Bureau looked at the number of Americans who were “credit invisible,” meaning they had no records with credit reporting agencies, and the percentage who were unscorable, meaning they had insufficient records to generate a credit score.
According to the report, as of 2010, approximately 15 percent of African-Americans and Latinos were deemed credit invisible, compared to 9 percent of whites and Asian-Americans. In addition, 13 percent of African-Americans and 12 percent of Latinos were unscorable, compared with 7 percent of whites.3
Latinos are also more likely to be dissatisfied with their credit scores than other populations. In 2016, 37 percent of Latinos said they were dissatisfied with their credit scores, compared to 32 percent of Americans overall.4
In 2016, only 54 percent of Latinos said they had checked their credit scores in the last year, compared to 60 percent of the general population. Twenty percent of Latinos had never checked their credit score, compared to 14 percent of the general population.4
The reasons Latinos gave in 2016 for not checking their credit scores in the past year were:
- They had no reason to (40 percent).
- They didn’t get around to it (35 percent).
- They were afraid it would be a low number (29 percent).4
In 2016, 72 percent of Latinos said they wanted to improve their credit score over the next year compared to 66 percent of the general population. Latino millennials were most driven to improve their credit scores, with 78 percent wanting to improve their scores over the next year.4
Twenty percent of Latinos with a spouse or partner said in 2016 that they would have benefited from knowing that person’s credit score before getting married.4
While minorities have lower credit scores than whites, they carry less credit card debt. As of 2013, white Americans had an average credit card balance of $7,315, higher than both Latinos ($6,066) and African-Americans ($5,784).5
Universal wariness of debt
One thing most demographic groups have in common is the desire to minimize their debt load. In 2015, 50 percent of African-Americans, compared with 49 percent of the general U.S. population, said reducing personal debt was an important financial priority. Forty-nine percent of African-Americans said in 2015 that they had some credit card debt compared with 49 percent of the general population.6
Latinos are also wary of racking up debt. In 2015, 64.4 percent of Latinos had one to three credit cards, 15.7 percent had between four and five credit cards, and 19.9 percent had more than five credit cards. When asked how they used credit cards, 51.6 percent of Latinos said they carry them but use them only for emergencies; 29.7 percent said they carry them frequently and 19.9 percent said they prefer not to use them because of high interest charges.7
Likewise in 2015, 72.3 percent of Latinos said the biggest disadvantage of credit cards is that they can lead you to get into debt and negatively affect credit if not used properly.7
Moderate-income African-American households carried an average credit card balance of $5,784 in 2012, down from $6,671 in 2008.5 Comparatively, moderate-income Latino households carried an average balance of $6,066 in 2012, compared with $8,661 in 2008.8
And while moderate-income African-Americans have rates of default and late payments similar to moderate-income whites, they are much more likely to suffer negative consequences. Seventy-one percent of African-American middle-income households reported being called by bill collectors as a result of their debt, compared to 50 percent of white middle-income households.5
Business debt is particularly troublesome for African-Americans. Nearly all (99 percent) of the African-Americans in a 2012 Demos survey who incurred expenses from starting a new business charged those expenses to a credit card and have not been able to pay it off. That compares to 80 percent of whites in the same situation.5
African-Americans are also more likely to switch credit cards than whites. In 2016, 45 percent of African-Americans said they had switched which credit card they used the most in the past one to three years compared to 22 percent of white respondents. And while 22 percent of white cardholders had used the same card for at least 10 years, only 2 percent of African-American cardholders said the same.9
Young, older women struggle with debt
Women appear to be more concerned about their credit card debt than men.
Approximately 35 percent of women in 2014 listed paying off credit card debt as a major financial concern compared with 22 percent of men. One reason for that may be that women are more likely to carry a credit card balance. While 39 percent of men said in 2014 that they always pay off their entire credit card balances, only 27 percent of women did.10
Younger and older women were more likely to carry debt than their male counterparts. While 63 percent of women between the ages of 18 and 24 carried debt in 2015, 36 percent of men in that age group did so. Along the same lines, 66 percent of women 55 to 64 carried credit card debt in 2015 while only 33 percent of men in that age group did so.11
Approximately 52.6 percent of women said they paid only the minimum balance compared to 50.2 percent of men. Another 22.3 percent of women admitted to making only the minimum payment occasionally compared with 21.9 percent of men. Women were also slightly more likely to incur fees on their credit card account, with 60.3 percent of women in 2015 admitting to having paid a late or over the limit fee in the past year compared to 57.4 percent of men.11
In 2016, women had 23.5 percent more open credit cards than men, yet both men and women had the same credit utilization ratio, of 29.9 percent. Women also carried 3.7 percent less debt than men did in 2016.12
When it comes to credit scores, women take the prize. In 2016, women had an average VantageScore of 675, compared with men who had an average score of 670.12
Credit card trust, loyalty rise with age
Senior citizens are the most likely group to stick with their favorite credit card. In 2016, 31 percent of seniors had used the same preferred credit card for 10 years or more and 20 percent had never switched preferred cards. Young people fell on the opposite end of the spectrum, with only 4 percent of 18 to 29 year-olds saying they had used the same preferred card for at least 10 years. Not surprisingly, 18 – 29-year-olds were most likely to switch credit cards frequently, with 43 percent saying they had changed preferred cards in the past one to three years.9
Not only are millennials not loyal to their credit card companies, but they aren’t bullish on credit in general. In 2015, 67 percent of millennials had at least one credit card, and millennial cardholders had on average three credit cards. However, 64 percent of millennials believed credit cards to be dangerous.13
Perhaps the reason for their wariness was the fact that 58 percent of millennial credit card holders in 2015 had either maxed out a credit card, been charged a late fee, had the interest rate go up on a credit card, had a credit card declined, or had defaulted on a credit card payment.13
Millennials also have lower credit scores than other groups, a reflection of the fact that credit scores seem to rise with age. In 2013, millennials had an average Experian VantageScore of 628. In comparison, Generation X had an average score of 653, baby boomers had an average score of 700 and those aged 66 and over at the time had an average score of 735.14
In fact, millennials’ credit scores dipped slightly two years later. In 2015, their average VantageScore was 625. Although 71 percent thought themselves knowledgeable about credit scores and reports, they overestimated their credit scores by 29 points, on average.15
32 percent of millennials in 2015 did not know their credit score.15
It seems no generation can escape credit card debt. Americans 50 and over had on average $8,278 in credit card debt in 2012. That year, 34 percent of Americans 50 and over used credit cards to pay for basic expenses, and half of Americans 50 and over used credit cards to pay for medical expenses, with the average medical expense charge being $893.16
In 2015, 38 percent of millennials had credit card debt, with the average amount being $7,799.15 When it comes to paying that debt off, most millennial cardholders -- 84 percent – said they pay their credit card bills on time, but 42 percent make only the minimum payment, suggesting that they will be carrying that debt for years to come.13