Credit cards are a valuable financial tool in helping you spread out large purchases over time, cover the cost of an emergency and earn the trust of lenders in the future when borrowing money for your first home or vehicle.
For many Americans, the credit-building journey begins in their teen years and continues throughout their lives as they learn to use credit cards responsibly and build their credit. The key is to start early and adopt responsible credit habits that will pay off in the long run.
Key statistics on first-time credit cards
- Average length of time it takes to get approved for a credit card: 30 days or less
- Average first-time credit limit: $500 – $1,000
- Average credit card approval rating for consumers with no credit: under 40%
- Average credit card balance: $5,221
- Average credit card utilization ratio: 25%
- Percentage of payments made with credit cards: 28%
- Percentage of college students with at least one credit card: 57%
- Average credit card debt for college students: $1,183
- Percentage of college students who make the minimum payment each month: 44.7%
Why do I need a credit card?
Credit cards aren’t just a spending tool. They’re essential tools for many consumers who hope to build a responsible, lengthy credit history and make larger purchases throughout their lives. Credit cards give consumers extra purchasing power and the ability to break down a large purchase into a smaller, more manageable monthly payment.
An added benefit is the fraud protection a credit card can provide that a debit card may not. In fact, the major credit card networks (Visa, Mastercard, American Express and Discover) give cardholders a $0 fraud liability guarantee. Here’s a look at how credit card usage varies across different consumers.
- Number of credit cards in use in the U.S.: 1.06 billion
- Average number of credit cards per adult: 3.84
- Average APR for credit cards in the first quarter of 2022: 15.13%
|Immediate access to funds||Easy to rack up credit card debt if you are not careful|
|Helps you build credit||Can hurt your credit score if not used responsibly|
|Ability to spread out large purchases over time||High interest rates if you carry a balance|
|Ability to earn cash back and rewards||Possible annual fees, cash advance fees, overdraft fees and foreign transaction fees|
|Greater fraud protection than debit cards||…….