The Top 3 Reasons Why Americans Avoid Credit Cards

by Lyle Daly | Updated July 21, 2021 - First published on Sept. 18, 2019

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A florist swiping a credit card between bunches of flowers.

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Have you steered clear of credit cards for any of these reasons?

As popular as credit cards are, they still have their fair share of detractors who proudly declare that they don't need or want to pay with anything but cash.

When you consider the benefits that credit cards offer, it's hard to see the logic behind this. They can earn you rewards on your spending, and they're a far more secure payment method than cash or a debit card.

So why the avoidance of credit cards? In our research on American credit card preferences, we asked people about their biggest perceived drawbacks of credit cards, and there were three reasons that stood out the most.

1. High interest rates

At the top of the list are high credit card interest rates, which more than two thirds (66.8%) of our respondents mentioned.

There's no debating this one. As of August 2019, APRs on new credit card offers are nearly 18%. Depending on the type of card you have and your credit score, you could end up with an APR of over 20%.

The best way to counteract those high interest rates is to never carry a balance on your card in the first place. Pay off the entire statement balance every month, and your credit card's interest rate won't be a problem.

If you do need to carry a balance on a credit card, then you should look into 0% intro APR cards.

2. The risk of debt

The risk of falling into credit card debt was a worry for 64.5% of consumers. This is certainly a valid concern, because we also found that 60% of consumers had credit card debt and the average amount was around $6,000.

Obviously, no one makes it their goal to accumulate $6,000 in credit card debt. But many consumers make the mistake of seeing their credit limit as something they can use to buy what they want, even if it's something they can't afford. When you have the credit to make a purchase and you know the bill won't be due for weeks, it's easy to allow yourself to overspend.

That's why financial discipline is a must if you're going to own a credit card. You need to have a budget that includes your monthly disposable income, and you need to track your spending so that you don't exceed that amount.

3. Costly fees

The prospect of paying fees makes consumers wary of credit cards, as 45.7% didn't like the idea of annual fees and 33.4% were concerned about any high-cost fees.

While a lot of people have an aversion to annual fees, there's no reason that has to stop them from getting credit cards. There are plenty of no-annual-fee cards with excellent perks, even though the cards with the most benefits generally do charge annual fees.

Just like annual fees, all the other credit card fees are entirely avoidable. Here are the typical situations when you'd get charged a fee with your credit card:

  • Late payments
  • Returned payments
  • Balance transfers (some balance transfer cards don't charge this)
  • Foreign transactions (many credit cards, particularly travel cards, have no foreign transaction fee)
  • Cash advances

It's not difficult to stay fee-free with your credit card. For the typical consumer, paying the bill on time is all it takes.

Think twice about avoiding credit cards

Although there are problems that can arise from having a credit card, they all depends on the choices you make. If you only use your card for purchases you can afford and pay the balance off on time, you'll avoid interest charges, credit card debt, and unnecessary fees.

Now, some consumers are adamantly against credit cards, and if that works for you, then there may be no need to change. However, you should carefully consider some of the benefits of having a credit card, including protection against fraud and the possibility to improve your credit history, before you make that choice.

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