Credit Card Usage And Ownership Falling, But Can Still Be Useful

The number of people holding credit card accounts has gone down, and usage is becoming more frugal.

According to the Christian Science Monitor, the percentage of Americans holding credit cards has gone to 71 percent, down from 78 percent in 2008.

“This suggests that credit cards—a staple of American consumer life for decades—might not be as vital a financial tool to individuals as they had been in the 1990s and 2000s,” a recent Gallup Poll suggests.

The Gallup Poll also shows that Americans are becoming better money managers. “They are carrying less credit card debt overall, own fewer cards and are more likely now to say they always or usually pay their full balances every month,” Gallup said in the April 2014 poll.

Though this growing trend is encouraging, those who do not use or own credit cards could benefit from credit cards if used properly and responsibly. Given the overdependence on credit cards in the past, and the subsequent damage to the national economy, it is encouraging to see Americans by and large adhering to responsible usage of credit cards, which offer credit card users some basic perks and financial tools to further manage their money more effectively.

Nerd Wallet is reporting that there are three good reasons for persons to use, but not overuse, a credit card. The first is that it builds credit. People who use a credit card to pay off monthly bills and expenditures, then pay the balance of the credit card off over a period of time, improve their credit score. In time, your credit limit will increase. But beware: don’t overspend and get in trouble with the limit increase. Keep to the plan and continue paying bills this way. Your credit will grow and provide for you.

The second benefit is that, depending on what kind of card you have, you can get something for nothing. If you like to travel, a card with a mileage points program can help you gain points towards travelling to see family, or whatever your travelling takes you. If traveling is not your style, a cash back card may be for you. Many credit cards that offer cash back would be more beneficial to you. Do take care to know the annual fees, if any, that apply. That annual fee may just cancel out any benefits you gain with the credit card in the first place.

The last benefit is you automatically give yourself a great tracking tool. Your payments are protected, your card is secure against misuse, and you can track where your money is going. So, if you see you eat out an awful lot, you can see that and adjust accordingly.

[Image courtesy of FICO Forums]