Flashing plastic is an easy way to pay but if not managed correctly it can lead to a number of money issues. However, that’s not to say that people don’t love plastic credit and there have been steady increases in spending on credit cards over the last three months to March in the US.
This is something that was unforeseen, mainly because the post-Christmas rush sees a decline in credit card spending for obvious reasons. That said, there have been a number of reports in the US which suggest that the amount of people carrying a large balance on their cards has dropped.
We’ve compiled a number of different credit card behaviours and the sorts of people who act in the specific way. Which do you fall into?
These are the people who keep their card balance to credit allowance ratio low. These people keep a low percentage of credit used to credit available – usually below 30% – to prop up their credit scores.
These people are also inclined to pay all of the balance off each month and are quite confident that their financial decisions will carry them through poor economic times. They are able to weather financial storms thanks to their nest egg.
These people have often had a torrid time during the financial crisis and ended up hurt by lowering lending rates. They may have had high credit utilisation rates at one time, but nowadays are extremely cautious with their cash. They’ve changed the way they utilise credit and don’t like to spend more than they have to, enjoying sticking to a budget.
These are the people who have learned how to manage their balance and pay as little interest on their credit as possible by carrying it to a low interest loan. These people have figured how to revolve with their card to lower tax. They are also well aware that paying more than the minimum will help lower their credit utilisation rate. This helps them maintain a good or even excellent credit score and continue this smart revolving of credit.
These people don’t know much about personal finance and don’t pass heed of interest rates or credit scores. They often get into serious debt but seldom know why they do. They are usually younger and haven’t a massive amount of experience in this area. Many are still owed a lot of money from missold PPI claims, while others often need to use payday loans to make ends meet.
However, they should learn to balance the books and pay a little more heed to financial advice as it can help them significantly in the longer term.
These are the four different sorts of card users – which one do you fall into?
Steve Ball loves to advise people on and write about personal finance – he has done so for a variety of great blogs