Average Credit Card Use in America

The average household has 12 credit cards and many people are finding themselves in serious credit card debt in the thousands. Credit cards are easier to get with major banks offering instant approval online and low introductory interest rates or no annual fee. However, there are rules and smart practices that every consumer should know and follow to avoid credit card debt and misuse.Read further to discover the truths regarding credit card use and how you can use credit cards to your advantage.

Credit cards can be useful tools in managing your money and paying for large ticket items. For instance, when purchasing a large screen tv you can actually double the manufacturer's warranty with certain types of credit cards. If you have a rewards type credit card, you could earn single or double rewards points which can then be redeemed for travel, merchandise, etc. A cash back or rebate credit card could earn you money back, gift certificates, or statement credits. A zero or low interest rate credit card gives you the ability to pay off the balance before the introductory APR expires, thus saving you interest charges. As great as these credit cards can be, consumers should know what they can afford within their budget, have a solid plan to pay off the purchase in a timely manner, and not use the credit card to buy items they can't pay for when the bill arrives.

Corporate business owners have long relied on credit cards to manage their employees' expense accounts, but small business owners are increasingly using business credit cards to purchase supplies and pay for business expenses. Several banks offer business credit cards with various rewards and discount programs, cash back, business supply rebates, and travel rewards to name a few. The benefits include online account management, points or cash back for gas, office supplies, and communications services. Some small business credit cards offer the option to pay in full or over time, low APR's for an introductory period of time, and generous credit limits. While these cards can be useful, business owners should compare credit card offers and understand all the terms and conditions before applying for any business credit card.

When applying for a student credit card there are many factors to consider. If you plan to use the card for yourself to pay for college expenses such as books, etc. you must be realistic when accepting the offered credit limit. The lower the limit, the less likely you will be to use the credit card for non-essential expenses, like spring break! You should take into account how much money you earn or the allowance you receive from parents, your ability to pay the balance in full each month, and what specific items you will pay for with the student credit card. The most important thing you can do is use the credit card sparingly and wisely. Many students accept every credit card offer they receive, max out the limits, and wind up in serious debt before they ever leave school. Don't let this happen, because it will affect your ability to qualify for loans, including student loans and car loans, and it will damage your credit history in addition to leaving you paying off debts for years to come.

Parents, if you want to get a credit card for your teenager or college student, please consider a pre-paid credit or debit card. These cards are reloadable and you have the control over the spending limit. Your child will have to learn how to manage their money and stick to a budget, plus you will avoid the dreaded sky high credit card bill containing charges that your student cannot pay, leaving you to pay it all!

In conclusion, credit cards can be useful tools to manage money and purchase items you want or need;however, you must remember the guidelines for wise credit card use. Decide what type of credit card you need and then research the best offers keeping in mind these points: Choose a credit card with no annual fee and a 0% or low % interest rate and APR. Know the terms and conditions regarding the use of your credit card including late fees, over the limit fees, and balance transfer fees before you apply. Compare rewards and travel miles programs, as well as cash back and rebate offers. Keep a reasonably low credit limit to minimize debt and always pay your balance in full each month. Read your monthly statement carefully and be aware that banks can raise your interest rate if you are late on payments for other cards and bills. Do not use credit cards frivolously or to live beyond your means. A good practice is not to have credit limits that exceed 20% of your gross income. Follow these guidelines to ensure your financial well being and avoid the pitfalls of credit card debt.