America runs on credit. It’s a fact of life. If you don’t have good credit you might not get jobs, not be able to rent, not get a loan. And to live in the United States you will almost certainly need a loan at some point in your life. Student loans, car loans, home loans. You get loans to pay other loans. It’s a vicious cycle that leaves much of the world confused, much of America in debt, and much of Wall Street rich. The average American household has several thousand dollars of credit card debt. What is worse is that many of those households willingly carry that debt. Moreover, the average American has several credit cards. These days you can buy almost anything, even if you don’t have any money. As long as you have a credit card you can just make minimum monthly payments and you’ll be fine right? Well, that can work if you don’t mind being a slave. Today we’re going to go over some of the key points concerning debt and credit cards. To summarize – if you don’t know how to use a credit card…don’t. These are 25 Things You Might Not Know About Credit Cards.
There are enough credit cards in circulation to wrap around the Earth at the equator three and a half times
Sources: MasterCard, Visa, CreditCards, Image: wikipedia
The first general credit cards were made out of paper and had a limit of $300
Source: msn.com, Image: wikipedia
The reason credit cards expire is because the magnetic strip suffers a lot of abuse. Typically it will last around three to four years.
Source: pbs.org, Image: wikipedia
This means that you can technically still use your credit card after it expires as long as you are not asked for the expiration date (ever notice that all the other details stay the same?)
Credit cards follow the Luhn algorithm, which is a checksum test on a number. It can tell you if the card is valid or not.
To see it in action, start on the right and double each second digit (2121 would become 4141). Then add them together and you should end up with a number divisible by 10. If not, the card is not valid.
The average credit card debt for an American adult in 2013 was nearly $5,000
Women are more likely than men to pay the minimum amount and carry a credit card balance
Source: Weston, Liz. 2012. Your Credit Score: How to Improve the 3-Digit Number that Shapes Your Financial Future, Image: pixabay
The minimum payments on credit cards are so low because they are specifically designed to get people into debt
This is because credit card companies only make money when you don't pay off your debt at the end of each month. Why? They make their money on interest and late fees.
If you ever make transactions online or over the phone, know that it is illegal for a vendor to require personal information of you. If you do not want to give out your home address, for example, they cannot deny the transaction.
The average American consumer has 1.96 credit cards
Credit cards are the most profitable sector in the banking industry. It rakes in more than $30 billion annually
Because they don't make any money off of them, credit card companies have a name for someone who pays off their debt every month: "deadbeat"
The first digit of the card represents the type of card: 1 and 2 are for airlines; 3 is for entertainment and travel; 4, 5, and 6 are for banking; 7, 8, and 9 are for other uses
Source: wikipedia, Image: freestockphotos.biz
VISA cards start with 4 while American Express starts with 34 or 37. MasterCards is 51 through 55
Source: wikipedia, Image: wikipedia
Even if you make your credit card payments on time, the credit card bank is allowed to raise interest rates if you don't make other payments (house, car, etc)
Credit card companies only have to give you 15 days notice before changing the terms of your contract
Due to the recession and stricter laws, millennials are less likely to own credit cards than their parents. Given the massive outstanding debt, hopefully the trend continues (although the credit card companies certainly aren't happy about it)
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