The credit cards consumers choose can have a considerable impact on their overall financial health – so Georgians like to choose wisely.
In a Georgia Credit Union Affiliates survey featuring 8,069 respondents, 68 percent used at least one or two credit cards every month. The survey also showed that 47 percent of respondents held up to $1,000 worth of credit card debt. Another 23 percent owed between $1,000 and $5,000.
Georgians are in line with national trends. About 71 percent of Americans have at least one credit card, according to The Motley Fool. About 18 percent of Americans have three or four cards in their wallet – and those cards tend to carry debt. ValuePenguin recently reported that 41 percent of all households in the U.S. are in debt to credit cards with an average balance of $9,333. The average amount owed by those indebted households is $9,333.
According to an Experian article, credit card debt in the U.S. has increased by 6.58 percent.
With the possibility that their credit cards could carry significant debt, it’s not surprising consumers want to shop around before choosing a card.
The majority of respondents in the GCUA survey – about 49 percent – said they look for the best interest rates and lowest fees in their credit cards. According to Experian, most Americans shop for credit cards with a similar mindset; 54 percent seek out a card with no annual fee while 40 percent look for a low interest rate.
It’s not all business, though. Another 45 percent of Americans and 33 percent of Georgians said perks including points for travel, discounts and other rewards could influence them to apply for a card.
Americans might have clear motivations for seeking credit cards, but that doesn’t mean they’re easily finding the cards that suit their needs. Although consumers know they should shop for the best deals, according to the Experian survey, 69 percent of Americans said they feel researching the correct card is too time-consuming. Another 61 percent said they become overwhelmed by the number of options available and 57 percent said it’s too difficult to tell which card would work best for them.
Still, the majority of respondents in the Experian survey, 64 percent, said they believe their perfect credit card is out there – they just haven’t found it, yet.
Consumers don’t let stress over choosing their credit cards deter them from using plastic to pay. Experian says, 459,000,000 credit cards are currently in circulation in the United States. The same study indicates 42 percent of consumers said they enjoyed keeping credit cards as a cushion for emergencies. Another 38 percent enjoy not carrying cash, while 34 percent see their cards as a way to build creditworthiness.
- Tips for choosing the right credit card for you:
- Check your credit. Consumers with higher credit scores are more likely to be approved for credit cards with better perks, while those with lower scores may need to shop around more. It’s best to begin the research process knowing your score, rather than be declined for the credit card you want after searching. Federal law entitles you to a free copy of your credit report from each of the three major credit bureaus every year. AnnualCreditReport.com is a federally authorized site where you can find your score.
- Figure out what type of credit card you need. There are three main kinds of credit cards, according to NerdWallet. Consumers can choose between cards that help improve limited or damaged credit, cards that save money on interest and cards that earn rewards. Additionally, some consumers choose cards to transfer a balance from an existing credit card. Be sure you’re choosing the card that most benefits your current situation.
- Decide how likely you are to carry a balance. If you know your credit card will carry debt you won’t be able to pay off right away, you should search for cards with low annual percentage rates. Otherwise, you could end up with card payments that don’t fit into your budget and that drag out longer than expected. A card with an 18 percent APR, for instance, would accrue $1,138 in interest on a $3,500 balance, according to CreditKarma.com. Making $120 payments on that card each month, it would take more than three years to pay it off. Make sure you know how much you can realistically afford to pay in finance charges each month and shop around accordingly.
- Read all the fine print. Thoroughly research and understand how your potential credit card will fit into your budget. You may be attracted to a card because of its 0 percent APR introductory offer, but make sure you understand how long that offer lasts and what you’ll be paying in finance charges once that rate changes. Some cards also include annual fees, late fees and foreign transaction fees you should be aware of before you apply. Be sure you understand everything about your new card, so you can use it as wisely as possible.
- Credit unions offer competitive rates on credit cards. For more information or to find a credit union near you, visit asmarterchoice.org.
Margie Burton, vice president of card services at Associated Credit Union, said she understands how difficult it can be to find the right credit card in a saturated market.
“Consumers today are challenged to find the prefect credit card because there are just so many choices available,” Burton said. “Selecting the right card can be confusing if you don’t know what to look for or understand how to identify a card that will best fit your needs.”
Burton said there are no set rules for finding the perfect credit card. Each person will have a different ideal based on their current financial situation.
“A member can determine if their card is a good fit for them by analyzing their spending habits,” Burton said. “For example, if a card is used only for emergencies, it’s best to find one with no or low fees. However, if a card is used primarily for travel, a Visa Signature card would be more suitable since it’s more widely accepted and carries additional travel rewards with no foreign transaction fees in most cases.”
Still, Burton acknowledged finding the right credit card can become complex, even when consumers think they know what to look for. She suggested overwhelmed shoppers consider checking out a credit union.
“The benefits of getting a card through a credit union are low fees and low interest rates,” Burton said. “And our credit cardholders are more than just a number. Credit unions know their members. They’ve fostered long-term relationships and therefore can better help identify what products are most suitable for them.”