American credit card holders do not keep their financial details in order, with 40 per cent of cardholders unaware of how much credit card debt they owe, a LendingTree survey has uncovered.
LendingTree, an online loan marketplace conducted a survey in which 3,170 Americans were asked a series of questions in order to gain insight into credit card behaviour.
Firstly, the survey found that only 2,462 of the sample group owned a credit card. Out of this number, 42 per cent had no idea what their combined total credit limit of their credit cards were. Over half (58 per cent) did not know the highest annual percentage rate (APR) of their credit cards.
The group sampled for the survey aren’t what you would call ‘financially savvy’, with 40 per cent of participants oblivious to their credit utilization ratio, a pivotal factor when trying to secure a loan or mortgage.
40 per cent of Americans are also unaware of how much debt they owe in comparison to their maximum credit debt allowance.
Americans seem to have problems when it comes to credit cards. On August 7th, Payment Eye reported that only 10 per cent of Americans have received the new chip-enabled cards, and nearly a third don’t know how to use them.
‘‘Credit cards can be a very convenient and beneficial form of payment when managed responsibly,’’ stated Doug Lebda, CEO of LendingTree.
‘‘But when you make purchases using a credit card and carry the balance from month to month, you incur interest – effectively increasing the price of your purchases by fifteen to twenty-five percent, depending on your interest rate.’’
‘‘Miscalculating a budget or not understanding how interest rates can affect your bottom line can lead to consumers being in unexpected credit card debt.’’
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