Women And Credit Card Debt: Is It Just A Stereotype?

Women And Credit Card Debt: Is It Just A Stereotype?

I’ll be the first to admit that I am a shopper. I love it. I love the high I get from buying things. I love walking into a store, seeing the bright, new shiny things and I love walking away with that bag full of my new goodies. When I am not shopping I am often thinking about shopping.

Now, in this sense I do fall under that stereotype that I like to shop and I happen to be a woman. But there is another stereotype that comes along with that one, which is that women are terrible when it comes to money. That is a harsher one to deal with, but it turns out, according to new research, that it is a false one.

NextAdvisor.com recently compiled research on men, women, and credit card debt, and found that while women are more likely to carry balances on their credit cards, men are more likely to take out cash advances. Okay, so this isn’t exactly totally clearing up the myth, but it is saying that men and women are equally bad when it comes to managing money. The study, which covered a single year in people’s personal finance lives, found that:

– 15 percent of men took an advance while only 12 percent of women did the same, making this one of the few areas where women behave better than men.

– 60 percent of women at one point or another carried a balance on their credit cards, but men were not far behind at 55 percent.

– 29 percent of women paid a late fee, but so did 23 percent of men.

– 42 percent of women sometimes made only the minimum payments, while 38 percent of men made the smallest possible payment some of the time.

These are not staggering differences. Though rom-coms and chick lit would lead us to believe otherwise, women are good with money and are in control, and they are doing this on an uneven playing field.

Avani Ramnani is the Director of Financial Planning at Francis Financial. She told us about some of the major stereotypes made about women and money:

“[The first one is that] women can’t invest well. This couldn’t be farther from the truth. Women will ask more questions and try to get all the information before making investment decisions. It has been found that women save more, trade less, and diversify more. These are the tenets of a successful investment strategy. For an individual who is looking at creating a nice nest egg for retirement, having a long term view, investing in a well-diversified portfolio and continuing to add to that portfolio are the most important factors for success.

“Women spend more than men. This is simply not true. Women and men spend on different things. Women do spend more money as more women manage the household purchases. They may spend more on clothing, food purchases, and other day-to-day items. However, men tend to spend on eating out, gadgets and transportation. Some of their purchases may also be masked as ‘office supplies!’”

Women are actually good with money, even though it is not a level playing field. According to NextAdvisor, women typically pay an interest rate that’s 0.5 percent higher than what men pay, regardless of their credit scores and financial information. And yet, women still managed to come out ahead of men when it came to their credit scores. The average credit score for a woman is 682, compared to the average score for a male of 675.

According to Elizabeth Duke, a member of the Board of Governors of the U.S. Federal Reserve, “Women account for 80 percent of all consumer purchasing decisions, making 93 percent of food purchases and 65 percent of auto purchases.” And they’re also more likely to be budget-conscious than men and more likely to take advantage of things like sales and coupons.

So how can you keep women on top of a trend going in the right direction? Ramnani had a few tips for how women can prevent credit card debt starting in their 20s:

1. Keep a budget.

This repeated advice is something good to adopt. It doesn’t need to be very hard. There are many websites and apps now that can track how you spend money. It does require some time for set-up and maintenance, but once you get in the habit of doing it, it can be fun! Track where you spend your money and determine if there are any parts of your spending that you can trim, if you are spending more than you make.

2. Have an automatic savings plan.

If at all possible, redirect 10 percent of your gross income to a savings account that you don’t raid. Once this money is not in your checking account where you can see it, you won’t feel tempted to spend it.

3. Do not carry credit card debt.

Once you have the automatic savings done, don’t spend more than you have. If you must buy something on a loan or a payment plan, this new “one-time” expense should be accommodated into your regular cash flow. You might need to give up spending on other things to accommodate this purchase.

4. Embrace educating yourself on money matters.

This is one of the more important areas of your life. Keep educating yourself about money, credit cards, and savings.


By: Meredith Lepore

Meredith is the editor of Levo League, where this article first appeared. Before that, Meredith was the editor of the women’s career site, The Grindstone and was on staff at Wall Street Letter and Business Insider. 

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