Avoid Making These Credit Card Mistakes

  • December 13, 2017

With the holiday season in full swing, many American consumers are swiping their credit cards more often to pay for gifts, travel, and other holiday-related expenses.  The New York Federal Reserve reports that revolving debt, typically comprised of monthly credit card debt, has hit the highest level in recorded history.  In June 2017, Americans had a collective outstanding balance of $1.021 trillion.  According to a TD Bank survey, nearly one-third of those credit card holders have never redeemed credit card rewards points and one-fifth have let credit card rewards points expire.  As credit card debt and delinquencies continue to rise, selecting the right credit card can have a significant impact on short- and long-term financial goals.

TD Bank’s survey showed 30% of Millennials, 19% of Generation Xers and 8% of Baby Boomers have let credit card rewards expire.  Bankrate credit card analyst Robin Saks Frankel explains, “credit card rewards don’t gain value over time.  Why have a rewards card if you’re not going to use the rewards?”

A JD Power and Associates survey of over 20,000 credit card holders showed one in five people have a credit card that doesn’t align with their spending patterns.  Consumers who do not travel regularly may not benefit from high tier travel credit cards as much as a simple cash rewards card.  Bankrate reports that cash back rewards are the most popular credit card incentive with 49% of credit card holders opting for cash back rewards over 17% choosing airline tickets and 12% choosing gift cards. 

The New York Federal Reserve report showed 4.6% of credit card debt had become 90 or more days delinquent in quarter three of 2017, up from 4.4% in quarter two, and up from 3.5% in quarter two of 2016.  Total credit card balances increased by $24 billion quarter-over-quarter.  Increases in consumer credit can be a positive or negative economic signal.  Healthy borrowing indicates that consumers are confident they will be able to repay debt.  Too much borrowing can be a cause for concern, meaning consumers are unable to afford goods and services with savings and salaries. 

With revolving credit currently coming in at an annual growth rate of 4.9%, the type of credit cards consumers choose can greatly impact their financial well-being.  Choosing the right credit card, and using available rewards, can be beneficial for both short- and long-term financial goals. 

 

Sources: MarketWatch, MarketWatch

Latest Tweets

© CMG Financial, All Rights Reserved. CMG Financial is a registered trade name of CMG Mortgage, Inc., NMLS ID #1820 in most, but not all states. CMG Mortgage, Inc. is an equal opportunity lender with corporate office located at 3160 Crow Canyon Road, Suite 400, San Ramon, CA 94583 888-264-4663. Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act No. 4150025; AK #AK1820; AZ #0903132; Colorado regulated by the Division of Real Estate; Georgia Residential Mortgage Licensee #15438; Illinois Residential Mortgage Licensee; Kansas Licensed Mortgage Company #MC.0001160; Massachusetts Mortgage Lender License #MC1820 and Mortgage Broker License #MC1820; Mississippi Licensed Mortgage Company Licensed by the Mississippi Department of Banking and Consumer Finance; Licensed by the New Hampshire Banking Department; Licensed by the NJ Department of Banking and Insurance; Licensed Mortgage Banker – NYS Department of Financial Services; Ohio Mortgage Broker Act Mortgage Banker Exemption #MBMB.850204.000; Licensed by the Oregon Division of Financial Regulation #ML-3000; Rhode Island Licensed Lender #20142986LL; and Licensed by the Virginia State Corporation Commission #MC-5521. CMG Mortgage, Inc. is licensed in all 50 states and the District of Columbia. Offer of credit is subject to credit approval. For information about our company, please visit us at www.cmgfi.com. To verify our complete list of state licenses, please visit www.cmgfi.com/corporate/licensing and NMLS Consumer Access (www.nmlsconsumeraccess.org).