This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Consumers Wise Up On Credit Cards





Credit cards have long gotten a bad rap from some personal finance experts. They insist carrying plastic in your pocket is the quickest way to financial ruin and, certainly, when used incorrectly, credit cards can do major damage to your budget.

However, new data from the American Bankers Association indicates Americans may be adopting a wiser approach to credit card use. Rather than racking up big bills they cannot pay, most card holders surveyed by the ABA appeared to be keeping their spending in check and paying their bill on time each month -- so much so that the number of bank card delinquencies dropped to an 18-year low in the third quarter of 2012.

Credit card bills getting paid on time, in full

As of the end of September 2012, only 2.75 percent of all bank card accounts were delinquent. A number that low hasn't been seen since 1994. The ABA defines a delinquent account as one that is 30 days or more overdue.

In releasing the third-quarter numbers, the association noted the low number of bank card delinquencies is likely a result of consumer efforts to fortify their finances in the midst of a slow economic recovery.

"Consumers are paying close attention to their finances as they continue to pay down debt in an uncertain economy," said James Chessen, ABA's chief economist, in a written statement. "The conservative approach consumers have taken to credit over the last several years has allowed them to better manage their debt and better position themselves for the future."

It's not just seasoned workers who are taking a conservative approach to credit cards either. A 2012 study by Sallie Mae found the number of undergraduate college students carrying credit cards has dropped from 42 percent in 2010 to 35 percent in 2012. Of those students with credit cards, a third say they do not carry a balance.

The benefits of responsible card use

Despite the gloomy predictions of some experts that there is no good way to use a credit card, there are still countless cards on the market that offer enticing benefits for responsible spenders. The best rewards credit cards can produce cash back or other perks that may benefit those who are able to pay off their bill each month and avoid carrying a balance.

To find the right card, consumers should consider the following card terms and fees before choosing a card:

  • Annual fee
  • Interest rate
  • Grace period before interest begins accruing
  • Rewards or cash back incentives
  • Restrictions on reward redemption

To maximize card benefits, policyholders should always be careful to spend within their budget and make timely payments. Fortunately, if the recent ABA data is any indication, keeping current on those payments may not be a problem for most cardholders.

null

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,805.41 +127.51 0.76%
S&P 500 1,964.58 +13.76 0.71%
NASDAQ 4,483.7150 +30.9230 0.69%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs