Nearly 200 million Americans owned a credit card in 2018 and an alarmingly number of credit card owners have canceled at least one in their life.
A new study by Bankrate surveyed more than 2,500 adults — including 2,301 credit card owners — to find out how many Americans have canceled their charge cards and whether they knew about the consequences with doing so.
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The survey found that 61% of American cardholders have axed at least one credit card. Thirty-seven percent of those cardholders claimed to have canceled more than one card.
Baby Boomers were reported as being the generation canceling the most with 71% saying they’ve canceled at least one card. Half of the Millennial cardholders have also cut up at least one card.
The reasoning behind cardholders canceling cards varies. 40% of participants said they had paid off the cards debt and it was no longer needed while just over a third claimed the interest rate was too high.
But canceling a card comes with consequences. While 12% said they canceled because they said it would help their credit score, that’s not the case at all. It decreases your credit score, which 42% of participants correctly knew.
“You should keep old accounts open to boost your credit score because scoring algorithms look favorably upon long-standing accounts and more available credit,” said Ted Rossman, an industry analyst at Bankrate.
Millennials were more likely than any other generation to close an account based on the rewards system, with a quarter reporting doing so.
“Millennials often love to travel but don’t have a lot of disposable income, so credit card rewards are a way for them to fund amazing trips at a much lower cost,” Credit card analyst Ted Rossman told Ladders.
Another factor that scared cardholders was overspending and worrying about debt (18%) which has been found as the most common problem for online shoppers.
Online shopping and blowing your budget
A new survey by CouponFollow polled nearly 2,000 consumers in the US and examined the current climate of online shopping through Americans’ credit card habits.
When it comes to online shopping consumers like to splurge on clothing, spending between $100 to $250 (29%) in a single session. Nearly half claimed to have blown their budget through online shopping. Particularly, it was Millennials who were found to shop and spend the most online.
Three in 10 Millennials place an online order at least weekly, according to the survey, which was higher compared to all American consumers. Nearly a fourth of Millennials claimed to purchase something online while they were drunk in the past six months.
But when it comes to blowing their budget, Millennials lead the pack. They were found most likely to bust their budget, with over half claiming to do so in the past six months. Comparing Millennials’ spending habits to Baby Boomers (21%) doesn’t even appear comparable. By breaking the bank, a third of Millennials have racked up more than $1,000 in credit card debt from online shopping, the most of any other age bracket.
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