Credit card management is such an important skill to learn. Financial management in general will help you through a lot of important decisions about your money. But when it comes to you credit cards, you may want to learn how to manage it specifically.
These cards are tough to live without. It is true that credit card debt can be destructive. It has very high interest rates that can quickly balloon your debt into an amount that you cannot afford. It is very tempting to use because it is so convenient to use for purchases. These are actually the reasons why this debt got a lot of Americans in trouble during the Great Recession. We blindly used our credit cards because we it gave us a sense of spending prowess that we could never get from other modes of payment.
While this could prove that credit card elimination is needed, we all know that it is not really necessary. All you really need is to improve your credit card management skills and you are all set to go.
During the time of the recession, credit cards got so much bad publicity. Credit card debt was part of the top three debts that consumers had. First was mortgages, second was student loans and credit cards were third. Now, the NewYorkFed.org reveals that credit card debt is no longer among the top three. It is replaced by auto loans that is steadily growing just like student loan debts. Over the years (at least after the recession), consumer have lowered their credit card balance. While the last report from the New York Fed revealed a $10 billion growth, the total number is still much lower than what it was back in the recession.
Does that mean Americans are now practicing better credit card management? The same data revealed that the delinquency rate of credit cards have decreased from 8.5% (Q1, 2014) to 7.8% (Q2, 2014). That certainly means more people are paying off their dues responsibly.
Earlier this year, we published an article that discussed how consumers are intent on improving their credit management skills this 2014. It seems that it is turning out really well for a lot of them. We can only hope that this data is true for both men and women.
Study reveals that men are better managers of credit cards than women
There is a study recently done and published through BMOHarris.com that revealed how men are actually more responsible at credit card management than their female counterparts. Here are important data from this survey.
- 39% of men VS 27% of women paid off their credit cards in full at the end of the month. We all know that this is one of the best credit card management habits that you can implement. It is okay to keep on using your credit card for purchases. After all, it can help you build up or maintain a good credit score. But, that does not mean you need to have a balance to boost your score. If you responsibly pay for your balance in full at the end of each month, you can stay out of debt while satisfying the need to use credit for a better credit score.
- 22% of men VS 35% of women view credit card debt as a major financial concern. Apparently, men are less concerned about their ability to pay off their credit card balances. This is probably because they are more inclined to pay the balance in full at the end of each month.
- 18% of men VS 19% of women carry a balance at the end of the month. This is almost a tie between the two – with women being slightly more inclined to carry a balance.
- 16% of men VS 22% of women say they pay off their balance every money but end up with a balance. This simply means that women intend to pay off their balance at the end of each month. However, a lot of them fail to commit to that payment and still end up with unpaid balances.
Even when it comes to bills (in general), 74% of men say that they are able to pay off their bills on time compared to only 59% of women who do the same.
While it might be safe to say that men have more ability to pay off their dues than women because they earn higher incomes but that might not always be accurate. In fact, the survey also revealed that men carry higher student loan debt at $44,248 compared to the $34,208 of women. They technically have a lot of other debts to take care of. Why are they able to pay more of their credit card debts?
You can probably thank their ability to practice credit card management. That is not to say that women are not smart spenders. They probably are but men are probably better at it.
Best practices when it comes to credit management
Learning how to manage your credit, credit card debt and all your other debts, is easier than you think. However, it will only be successful if you change your mindset about debt. We cannot deny that credit is useful in this day and age. It allows us to enjoy things that we normally have to wait an eternity to own if we had to save up cash for it. But that convenience puts more responsibility on our shoulders to be wise when it comes to how we manage your debts.
According to an article published on CreditCards.com, young adults are more inclined to use their cards for purchases that are less than $5. But the poll revealed that as the survey respondents age, they rely less on cards and more on cash to pay off small purchases. Does that indicate that consumers who are older have better sense at credit management?
Probably not. However that does not mean you should not practice a couple of credit management habits. This is why we are listing tips on how you can manage your debts better. While focusing on credit card management is important, these tips can be applied to any type of debt.
- Always consult your budget before borrowing. Consulting your budget will allow you to look at your income and expenses so you can make smarter choices about getting the debt or not.
- Know how to pay a debt before you borrow it. Another tip is knowing how you will pay a debt before you actually apply for it. Doing this will allow you to judge your ability to pay off the debt you want to take on.
- If you cannot pay it in cash, do not charge it. This is a specific tip for credit card management. Before you use your card, make sure that you can pay for that purchase in cash. If yes, then put aside that money so when the bill arrives, you can pay off the full balance. that should keep you from accumulating credit card debt.
- Have an open communication with your creditor/lender. Some consumers find them intimidating, especially when they hit a financial road bump that makes them unable to pay off their usual bills. It is hard to call them when you cannot meet your due date but that is actually the smartest thing that you can do. Be honest about your financial situation if you are finding it hard to pay off what you owe. Discuss with your creditor or lender your options to repay your debt despite your current financial crisis.
- Borrow only to increase your personal net worth. Finally, you want to borrow only if it will improve your current financial situation. Debt for homes, education and businesses are examples of debts that can improve your personal net worth. Do not use debt to buy junk. These unnecessary purchases are the things that could drive you under.
Make sure that you stay away from financial management sins that are usually manifested on wrong credit management practices. Once you master these management skills, you can avoid a lot of financial blunders in the future.