Parade magazine recently ran a piece on how to find the best credit cards for you. The article contained several facts/quotes that I wanted to highlight and comment on. Here's the first:
You need a card that matches your credit use. The best deal for your friend may not be right for you.
So true. What's the best card for one person won't always be the best card for someone else. A few of the factors that influence what's the best card for you: what rewards you're interested in, how much you charge, where you charge it, and how you pay off your charges.
Four in 10 Americans pay their balances in full every month.
Yikes! Think of the opposite of this -- six in ten Americans DON'T pay off their balances in full every month! Don't people know that paying off your credit card slowly can cost a fortune?
You typically get back about 1% of what you charge, or $50 for every $5,000 you spend.
That's right -- 1% is considered decent, average, typical. That's why I'm especially happy with my Blue Cash from American Express card. It made me almost $500 last year and earned me 1.84% cash back from my total purchase amount. Not bad, huh? It's almost double what's "typical." I'll take it.
For some more keys on making the most from your credit card, see these links:
You claim that 6 of 10 people do carry a balance. I think this is false logic, what about all the people who don't have credit cards?
A quote from http://www.csrees.usda.gov/newsroom/lgunews/economics/news001.html stated:
"A survey conducted by the American Bankers Association earlier in 2005 indicated that 43 percent of consumers carry balances each month."
This seems to contradict the evidence above that 60% of people carry a balance. Neither of these claim that the stat is derived from the American populace or if they are derived from the American populace that holds credit cards. I wonder if they did the survey at the mall, or door to door?
The more I read online, the more I think I should give up Internet and TV and not just TV. It seems to me no matter where you turn is stat twisting and sensational garbage.
Posted by: Traciatim | July 23, 2007 at 07:12 PM
Ok, let's say it's 43% who carry balances every month -- is the conclusion any different? It's still a MAJOR part of the population.
Posted by: FMF | July 23, 2007 at 08:40 PM
Check out the Sharebuilder Rewards card if you are like me and want to spend your money and have to trick yourself into saving it. You get 1% cash back into your Sharebuilder account. You get it in $25 lumps once you have accumulated $2500 of spending. I do that, plus a $50 a month auto transfer into the money market account on Sharebuilder. Then once I have $250, I purchase an index fund (S&P 500). (I wait until I get $250 because you have to pay $4 to buy) It is just another way of sneaking money away into a saving plan rather than spending it as soon as it comes in. I put big ticket items on the card that I know I have the money in savings to pay for (computer, tuition, books) just to funnel it through and get the reward. I also put gas on the card for convenience. It isn't worth it if you don't pay your bill in full.
Posted by: Kelly | July 24, 2007 at 12:40 PM
FMF, my point wasn't that there are not far too many people that carry balances. My point was that the statistics aren't specific enough to draw any conclusions from. The 2004 according to the SCF published by the fed reserve only 74.9% of US families actually have cards. Not people, but families. This means we can't get an accurate picture of how many people actually have them with this stat either, but we can try.
Assuming 300M people in the USA, and 2.5 people per family you have 120M families. Of these you have 74.9% with cards, so 89.9M families have cards. Of these lets say that half share one card (one cardholder) and the other half 2 people in the family each have a card (two cardholder). Keep in mind you a a 'cardholder' if you have 17 cards or 1 card. So you would have (89.9M * 50% * 1) + (89.9M * 50% * 2) = Number of people with cards, that's 89.9 + 44.95 = 134.85M people. Of these only 43% carry balances so about 58M people.
The original stat implies that 60% of AMERICANS carry balances on their cards. That would be 300M * 60% = 180M people. This leaves a spread of 122M people that we have no clue if they really do have cards, if they really do have balances, or if they do or do not pay them off every month.
Like I previously stated in either case, 58,000,000 - 180,000,000 people carrying balances on cards is just ludicrous. The problem I see here is that most people will read the article and assume that 180,000,000 people carry balances when that is simply may not be true. 122,000,000 of those people may be falsely included just by omitting facts or detail about the statistics. The truth lies somewhere in there but it sure wouldn't make for a good article if they said something along the lines of "Somewhere between 19% and 60% of Americans carry a balance on their credit cards each month", but that is exactly what they said.
Posted by: Traciatim | July 24, 2007 at 10:10 PM
"The problem I see here is that most people will read the article and assume that 180,000,000 people carry balances when that is simply may not be true."
Personally, I don't see that. When I read a percentage stat, I don't automatically convert it into number of people. I simply see that it's "a lot of people" no matter how you look at it and the resulting conclusions for me are the same no matter what the "real number" is -- way too many people are carrying credit card balances.
Posted by: FMF | July 25, 2007 at 07:45 AM