How do you know if you have an unhealthy attachment to your plastic — and are potentially vulnerable to a mountain of debt? BankingMyWay has five red flags that suggest your relationship with your credit card is headed into addiction territory.
First, know that Americans, even despite these though financial times, love their credit cards. Check out these statistics:
- In 2008, consumers had an average of 5.4 cards, according to an Experian (Stock Quote: EXPN) market report.
- The U.S Census Bureau reports that there were 159 million credit cardholders in the U.S. in 2000, 173 million in 2006 and it estimates that number will hit 181 million by 2010.
- The Census Bureau also reports that there were nearly 1.5 billion credit cards in use in the U.S. in 2006. According to The New York Times (Stock Quote: NYT), a stack of all those credit cards would reach more than 70 miles into space, and be almost as tall as 13 Mount Everests.
Why do we have so many credit cards? Maybe it’s the way we view credit.
Historically, credit cards aren’t that ancient — in fact, they’ve only been with us for about 50 years. The first widely accepted credit card was issued in 1958 by American Express (Stock Quote: AXP) and the first general-use credit card that allowed balances to be paid over time was the BankAmericard (later changed to Visa (Stock Quote: V) which came out in 1959.
The idea, at least from card issuers, wasn’t to spend money you don’t have with a credit card. Rather, it was a convenience — you didn’t have to stop at the bank for cash to buy those Chuck Taylor basketball sneakers. You could use your plastic instead, thus saving you a trip.
But over time, too many U.S. consumers decided that credit were essentially free money for the time being, and thus spent happily without worrying about the bill coming due in 30 days (and even then, a minimum payment would suffice).