Credit card statistics for the first time in 2022

Credit cards are a valuable financial tool to help you spread large purchases over time, cover the cost of an emergency, and gain the confidence of lenders in the future when you borrow money for your first home or your first vehicle.

For many Americans, the journey of building credit begins in adolescence and continues throughout their lives as they learn to use credit cards responsibly and build their credit. The key is to start early and adopt responsible credit habits that will pay off in the long run.

Key statistics on the first credit cards

  • Average credit card approval time: 30 days or less
  • Average first-time credit limit: $500 to $1,000
  • Average credit card approval rate for consumers without credit: less than 40%
  • Average credit card balance: $5,221
  • Average credit card usage rate: 25%
  • Percentage of payments made with credit cards: 28%
  • Percentage of college students with at least one credit card: 57%
  • Average student credit card debt: $1,183
  • Percentage of students who make the minimum payment each month: 44.7%

Why do I need a credit card?

Credit cards aren’t just a spending tool. They are essential tools for many consumers who hope to build a sustainable and responsible credit history and make larger purchases throughout their lives. Credit cards give consumers additional purchasing power and the ability to break down a large purchase into a smaller, more manageable monthly payment.

An added benefit is the fraud protection a credit card can offer, unlike a debit card. In fact, the major credit card networks (Visa, Mastercard, American Express, and Discover) offer cardholders $0 fraud liability coverage. Here’s a look at how credit card usage varies among different consumers.

  • Number of credit cards used in the United States: 1.06 billion
  • Average number of credit cards per adult: 3.84
  • Average credit card APR in the first quarter of 2022: 15.13%
Immediate access to funds Easy to rack up credit card debt if you’re not careful
Helps you build your credit Can hurt your credit score if not used responsibly
Ability to spread large purchases over time High interest rates if you have a balance
Opportunity to earn cash and rewards Any annual fees, cash advance fees, overdraft fees and foreign transaction fees
Better fraud protection than debit cards Vague approval requirements
Possible insurance benefits, including rental car and travel insurance May reduce your disposable income if you have high balances

There are several advantages and disadvantages to having a credit card. The most important benefit, however, is the pathway it creates to a strong credit profile.

Why having a credit score is important

For lenders, landlords, and even some employers, your credit can play a role in your approval for an apartment rental, mortgage, job, and more. That’s why it’s important to protect your credit and manage it responsibly so you don’t put yourself in the position of losing your dream purchase down the road. Here’s a look at what the average credit score looks like across generations and income levels.

baby boomers 736
Generation X 699
Millennials 680
Generation Z 674
Lower income 658
Moderate income 692
Median income 735
High income 774

How does a credit card work?

Credit cards give you a revolving line of credit to make purchases. Each month, you will be required to make a payment on your debt balance, which should not exceed the approved credit limit your issuer has offered you. As long as you continue to make payments and manage your credit responsibly, your account will remain in good standing and you can continue to use it as needed.

The key to a successful credit journey is to watch your spending. It’s important to be selective about your credit card purchases and automate your payments or set reminders for yourself to avoid late or missed payments that could hurt your credit score.

What to use your credit card on

Not all purchases must be made with a credit card. For example, an impulse purchase at a cash register is something you might want to pay with cash or debit card rather than credit. Paying for an item with a credit card will accumulate a balance on which you will have to pay interest if you cannot pay it in full from month to month.

You’ll also want to weigh whether using your credit card to cover the cost of something will net you cash, rewards, or potential discounts. Here’s a look at a few cases where it makes sense to use a credit card.

Rental car Most car rental companies require a credit card in case of damage to the vehicle.
Hotel stay Hotels often require a credit card on file to cover incidentals, and hotel cards offer discounts and perks.
Repairs or household appliances Using a credit card will allow you to spread out those large purchases over time, making them more manageable.
Online shopping Credit cards offer an extra layer of protection against fraud that other payment methods don’t.
Trip costs Your credit card may offer rewards or discounts for travel-related expenses, as well as insurance if you need to cancel or reschedule your trip.

How to apply for a credit card

Applying for a credit card is a fairly simple process. However, too many new card applications can hurt your credit score. You will want to be selective about when and which card you request. Here’s an overview of what you can expect when you apply for a new card.

  • Know your credit score: Many maps have a score requirement that you will need to complete to qualify for their map. For the most accurate information, you can request a free copy of your credit report from each of the three credit bureaus once a year. Your credit card may also offer free access to your score. If you don’t have a credit history, you can opt for a secured credit card as a starter card while you work on building up your credit history.
  • Read the fine print: The terms of each card will be listed in a credit card agreement. The Schumer Box will tell you the annual fee for the card you’re interested in, the APR, penalties, and other fees.
  • Gather all your documents and information in advance: Most apps will ask you for key information such as your social security number and annual income. Have this information handy as you prepare to apply.
  • Complete your application: Several options are available to you to complete your credit card application. You can visit the issuer’s website, apply in person if the issuer has a physical location near you, apply by phone, or send your application by mail.

Types of credit cards

There are several types of credit cards that all work a little differently, have their own set of benefits, and cater to different consumers and their individual spending habits. Choosing the right card often comes down to one that will meet your financial needs and reward your regular spending.

For those who love to travel, a card focused on travel rewards could be a huge way to save money. For others who like to cook and regularly go to the grocery store each week, a card that offers cash back on grocery purchases might be a better option. College students who are early in their credit journey might benefit more from a student card that rewards student spending and good payment habits.

  • Most common type of credit card: unsecured credit cards
  • Average credit limit for people who open secured credit cards: $200 – $2,500
  • Percentage of Americans who use a travel card to offset travel expenses: 70%
  • Percentage of Americans who have an airline or other travel card: 19%
  • Percentage of Americans who prefer cash back over other rewards: 41%
  • Percentage of Americans who own a cashback card: 46%
  • Percentage of Americans who own a retail card: 31%

How to Avoid Credit Card Debt

Having extra purchasing power can tempt you to spend more than your budget allows. For this reason, establishing healthy habits ahead of time is essential if you hope to avoid building up a balance you can’t pay off. Here are some key ways to avoid damage from debt and credit rating:

  • Automate your payments: A late or missed payment may result in a significantly lower credit score and additional fees and interest charges. If you tend to be forgetful, set yourself up for success by automating your monthly payments. This way you never have to worry about missing a payment and it will automatically remove a task from your to-do list.
  • Keep your credit utilization rate low: Experts generally recommend keeping your spending to less than 30% of your total available credit. Keeping your spending below a certain threshold makes it easier to pay off your balance and shows lenders that you can manage your credit responsibly.
  • Pay more than the minimum each month: Carrying a high balance from month to month can result in high interest charges. Reducing your balance by paying a little extra will help you avoid potential fees and charges down the line.

The bottom line

Credit cards often have a bad reputation for being a gateway to overspending. However, when used responsibly, they can be the key to achieving your larger financial goals. Before embarking on your credit journey, make sure you choose a card that meets your spending needs. Try to establish positive credit habits early on so your credit card can work for you, not against you.