Credit Card Overload
While paging through the latest issue of Smart Money, I ran across an interesting statistic. Apparently the average American household has 14 (!) credit cards. Honestly, I find this somewhat hard to believe, and wonder if that’s not the number of cards as opposed to the number of accounts.
For example, my wife and I have three credit card accounts. However, we each have our own cards, so that works out to a total of six cards. Since we don’t actively use one of our accounts, two of these cards actually reside in my sock drawer, effectively reducing us down to two accounts and a total of four cards.
Regardless of how you count things up, however, it’s clear that American’s have a lot of plastic. Unfortunately, this large amount of plastic is accompanied by an equally impressive amount of credit cards late fees. In fact, consumers in this country make an estimated 60 million late payments per year. At an average of $27 per late fee, that works out to a bit more than $1.6 billion in late fees.
If you have a ton of credit cards, my best advice is to simplify your strategy. Focus on one or two particularly generous reward credit cards and stop using the rest. In our case, we use the Amex Blue Cash rewards card as our primary card, with our Discover More card being used as a backup. In my opinion, these two cards are amongst the very best cash back reward credit cards, and limiting ourselves to just two cards makes things much simpler when it comes to paying the bills.
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Smart Money is ordinarily a fine publication, but if they say the average American has 14 credit cards, they got hold of some bad data.
Comment by Dan Ray — Sep 16th 2008 @ 11:58 amThe best data comes from the Federal Reserves triennial Survey of Consumer Finances. The last one was that has been released was done in ‘04, so it’s dated, but the data have been consistent throughout the years.
See chart 1158 on this page: http://www.census.gov/prod/200.....anking.pdf
The median number of general purpose credit cards is 2. The number is certainly higher when you count in gas cards and department store cards, but not by 12.
I have 4 “department store” type cards and 11 other credit cards that I can think of off-hand (no gas cards in there). Only two of the cards have a balance on them now, but back in the day, I used every one of them to transfer balances to, or charge to, etc.
There’s probably a few that I missed, simply because I don’t ever use them. And I’m not counting my wife’s cards – those are just the ones in my name.
Comment by Brack — Sep 16th 2008 @ 1:57 pm