What Does your Credit Card Say About You?

by : Adam Singleton

There are so many credit cards on the market these days and those you use can say a lot about you. As well as a multitude of designs there is also a variety of types: affinity cards, loyalty cards, reward cards, and charity cards. But, which card you choose is most likely to be determined by how you use it.

A major American study conducted by J.D. Power and Associates analysing typical credit card customers' behaviour highlighted two major types of card users; the 'transactor' and the 'revolver'. A 'transactor' typically pays off their entire balance each month, so are totally unconcerned with the interest rate that the card carries. Their focus is firmly on the rewards that the card brings. However, the survey also highlighted the fact that some rewards give more satisfaction than others. Cards offering air miles are popular, but that satisfaction wanes when attempts are made to redeem the mileage, with customers often complaining that flight choice under air miles offers is severely restricted.

Cash back is very popular as a reward, especially from those who repay in full each month as they are effectively getting discounts on the goods they bought merely for using their credit card. Other affinity cards offer rewards, but not to the card user; premiership and other football teams are popular with card issuers and offer a form of cash back. From those schemes a percentage of each purchase goes to the team featured on the card, rather than the card holder.

The other type of card-holder - the revolver - typically carries a large balance on their credit cards, transferring it from one to another, seeking the best interest rate deal they can get. Rewards are not relevant to this group as interest rates on reward cards tend to be higher; that's how they fund them! They are typically card users who transfer a balance to zero-interest deals once their current deals expire.

However, most credit card users are a combination of transactor and revolver, using separate cards for each category. They will have a revolving balance on one card and use another for their day-to-day spending. For these 'mixers' reasons for using particular credit cards will vary depending whether it's their revolver or transactor card. They may even choose a card for a non-financial reason such as the way the card looks, or on a combination of the design and the benefits that it offers.

Whatever the reason for the choice of card, the way you use it is most likely to influence it.