Credit cards are the most accessible financing tool for Americans. Most adults — even those with already damaged credit or no credit history at all — can easily open an account.
In California, about 77 percent of adults with a credit score have a credit card or home equity line of credit (HELOC), according to the Federal Reserve Bank of New York’s Community Credit report. This figure dropped sharply in the years following the Great Recession but picked back up after 2012 and has grown steadily since.
The percentage also varies widely within California — from 63.5 percent in Tulare to nearly 86.6 percent in San Francisco. The national share, by comparison, is just over 73 percent.
As many people learn in adulthood, access to credit is important. It helps them build a solid credit history, which in turn helps them buy a house or rent an apartment.
However, having such easy access to credit can also lead to irresponsible financial behavior. Spending beyond their means is a common mistake among credit card holders. Some use plastic for large emergency expenses, while others purchase things they otherwise couldn’t afford. They assume — or better yet hope — they’ll come up with the cash to pay off their balances later. This kind of reckless spending often traps many credit card holders in an endless cycle of debt.
In California, more than 56 percent of adults with access to credit cards use 30 percent or more of their spending limit. A balance of less than 30 percent is what credit experts consider a healthy credit utilization ratio, or the amount of credit used against the amount that’s available. Although a high balance does not necessarily mean the cardholder can’t pay it off, the New York Fed’s data shows that nearly 1 in 5 consumers with access to plastic in California were behind on their credit obligations at some point in 2017.
If you’re struggling with high credit card debt, you have options. Americor is one place to start. We offer a FREE debt analysis and consultation to evaluate your current financial situation.