HOBOKEN, N.J.–Why do some consumers refuse to get a credit card, despite the attractive rates, convenience, ability to build a credit history and compelling rewards programs?
A new survey of non-credit card holders offers some answers. Conducted by LendEDU, the analysis probed why some consumers continue to pay exclusively in cash or debit? What the analysis found is that those who don’t carry credit cards primarily come from lower-income households and/or have low credit scores. Nearly half say they have no plans to apply for a credit card.
Below is a look at what the survey of non-credit card-holders found:
Survey Results
1. What is your annual income?
a. 48.87% answered "$0 - $25,000"
b. 25.64% answered "$25,001 - $50,000"
c. 10.86% answered "$50,001 - $99,999"
d. 14.63% answered "$100,000+"
2. Approximately how much do you spend using cash or debit card per month?
Response average: $1,109.94 per month
3. What is your credit score?
a. 31.98% answered "Unsure"
b. 36.20% answered "Less than 600"
c. 10.26% answered "601 - 660"
d. 7.54% answered "661 - 720"
e. 5.88% answered "721 - 780"
f. 8.14% answered "780+"
4. Why have you not obtained a credit card?
a. 16.14% answered "Afraid of credit card debt/overspending"
b. 16.29% answered "Applied but have not yet gotten accepted"
c. 33.94% answered "Find them unnecessary"
d. 7.84% answered "Not sure which credit card to get"
e. 25.79% answered "Other"
5. Who/what most influenced your decision to not obtain a credit card?
a. 16.14% answered "Parents"
b. 6.03% answered "Friends"
c. 5.43% answered "Media"
d. 10.41% answered "Financial Crisis of 2008/2009"
e. 61.99% answered "Other"
6. Do you plan on applying for a credit card in the future?
a. 25.04% answered "Yes"
b. 42.08% answered "No"
c. 32.88% answered "Unsure"
LendEDU noted in its analysis that respondents spend an average of $1,109.94 per month with either cash or a debit card, equating to $13,319.28 in spending annually. “They could have easily collected $133.19 in cash back each year if they had paid using a card offering 1% cash back instead, and the rewards could have been even greater with cards offering greater rewards rates,” LendEDU stated.
In its analysis, LendEDU continued, “We expected credit card debt and overspending would be the driving factor pushing respondents away from obtaining credit cards. In contrast, the poll results show credit card debt/overspending was the second least popular answer - receiving 16.14% of responses.”
A Surprise
Another surprise: one-third (33.94%) of those surveyed said they don’t carry a credit card because it’s “unnecessary.”
“Fear of credit card debt and overspending was only the most common response for only users with credit scores between 601 and 660 accounting for 27.94% of respondents in that particular demographic,” LendEDU said. “Credit card debt is currently a serious issue in the United States with $784 billion owed by consumers as of Q2 2017. Some consumers have compulsive urges or may struggle to pay bills consistently on a monthly basis, so we fully expected credit card debt/overspending to be the primary factor behind respondents’ decisions not to obtain a credit card. The study results show the most popular response was rather that credit cards are unnecessary.
“What’s more surprising is that the sentiment is shared not only by older consumers who may have less purpose for building their credit scores, but also by younger consumers as well,” LendEDU continued. “Finding credit cards unnecessary was the most popular response (with 33.21%) for those between ages 21 and 34, even though building credit is crucial during this particular age. We also see that only 33.93% of this group plan on applying for a credit card with certainty. To take things further, 41.51% of those unsure of their credit score also reported they had not obtained a credit card because they find them unnecessary, perhaps suggesting they simply neglect their credit completely. Only 23.11% of this demographic plan to apply for a credit card with certainty.”