Bad Behavior: Men, Women and Credit Card Debt

women and credit cards
Plenty of studies have shown that men and women think and act in different ways, but when it comes to credit card debt, both sexes demonstrate bad behavior. recently compiled research on men, women, and credit card debt that reveals that while women are more likely to carry balances on their credit cards, men are more likely to take out cash advances.

The study covered a single year in people's personal finance lives. Here are some of the ways credit-card-carrying men and women differ, and how their behavior can be damaging to their financial well being.
  • Using a cash advance. Cash advances typically carry a higher interest rate than other credit card transactions, yet over the course of a year, 15 percent of men took an advance. Just 12 percent of women did the same, making this one of the few areas where women behave better than men.
  • Carrying a balance. Sixty percent of women at one point or another carried a balance on their credit cards, but men aren't far behind: 55 percent carried a balance. Among other downsides, carrying a balance above 25 to 30 percent of your credit limit can damage your credit score.
  • Late fees. Twenty-nine percent of women paid a late fee, but so did 23 percent of men. Late payments don't just cost you cash on a single bill -- they also can cause your credit score to go down and the interest rates you pay to go up.
  • Making only the minimum payment. Forty-two percent of women sometimes made only the minimum payments, while 38 percent of men made the smallest possible payment some of the time. Minimum payments are structured so that it will take years and hundreds or thousands of dollars of interest payments to retire your debt.
  • Average debt. This is another area where women come out (slightly) better than men: Men carried an average of $12,953 in debt, while women had an average of $11,486.
On the other hand, some men and women are doing the right thing when it comes to money management:
  • Paid in full. Over the course of a year, 45 percent of men paid their credit card balance in full each month, and 39 percent of women did the same. Paying off your credit card balances can increase your credit score dramatically.
  • Comparison shopped for the best credit card. Thirty-seven percent of men have shopped around for the best card for their needs, while only 31 percent of women have compared cards. Comparing rates can save you money if you do carry a balance.
  • Pay their bills on time. Ninety-three percent of men said they paid their bills on time, as did 82 percent of women.
  • Check their credit report. Fifty-eight percent of men said they'd checked their credit report, compared to 49 percent of women. You should check your report annually to look for errors and ways to improve your credit score.
Is the playing field level?

According to NextAdvisor, women typically pay an interest rate that's 0.5 percent higher than men, regardless of their credit score and financial information. Still, with that working against them, women come out ahead when it comes to credit scores: The average credit score for a woman is 682 compared to the average score for a male of 675.

These latest statistics reveal that both genders have a long way to go to achieve an "A" in money management.

Why Your Bank Thinks Someone Stole Your Credit Card
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Bad Behavior: Men, Women and Credit Card Debt

One reason why Marquis' gas purchases might have triggered a fraud lockdown? Filling their tank is a common first move for credit card thieves.

"Some of the things they look at are small-dollar transactions at gas stations, followed by an attempt to make a larger purchase," explains Adam Levin of Identity Theft 911.

The idea is that thieves want to confirm that the card actually works before going on a buying spree, so they'll make a small purchase that wouldn't catch the attention of the cardholder. Popular methods include buying gas or making a small donation to charity, so banks have started scrutinizing those transactions.

Of course, it's not a simple matter of buying gas or giving to charity -- if those tasks triggered alerts constantly, no one would do either with a credit card. But Levin points to another possible explanation: Purchases made in a high-crime area are going to be held to a higher standard by the bank.

"It's almost a form of redlining," he says. "If there are certain [neighborhoods] where they've experienced an enormous amount of fraud, then anytime they see a transaction in the neighborhood, it sends an alert."

(Indeed, Erin tells me that one of the gas purchases that triggered an alert took place in a rough part of Detroit, which she visited specifically for the cheap gas.)

People who steal credit cards and credit card numbers usually aren't doing it so they can outfit their home with electronics and appliances. They don't want the actual products they're fraudulently buying; they're just in it to make money. So banks are always on the lookout for purchases of items that can easily be re-sold.

"Anytime a product can be turned around quickly for cash value, those are going to be the items that you would probably assume that, if you were a thief, you would want to get to first," says Karisse Hendrick of the Merchant Risk Council, which helps online merchants cut down on fraud. Levin says electronics are common choices for fraudsters, as are precious metals and jewelry.

Many thieves don't want to go through the rigmarole of buying laptops and jewelry, then selling them online or at pawnshops. They'd much prefer to just turn your stolen card directly into cold, hard cash.

There are a few ways that they can do that, and all of them will raise red flags at your bank or credit union. Using a credit card to buy a pricey gift card or load a bunch of money on a prepaid debit card is a fast way to attract the suspicions of your credit card issuer. Levin adds that some identity thieves also use stolen or cloned credit cards to buy chips at a casino, which they can then cash out (or, if they're feeling lucky, gamble away).

When assessing whether a purchase might be fraudulent, banks aren't just looking at what you bought and where you bought it. They're also asking if it's something you usually buy.

"The issuers know the buying patterns of a cardholder," says Hendrick. "They know the typical dollar amount of transaction and the type of purchase they put on a credit card."

Your bank sees a fairly high percentage of your purchases, so it knows if one is out of character for you. A thrifty individual who suddenly drops $500 on designer clothes should expect to get a call -- or have to make one when the bank flags the transaction. If you rarely travel and your card is suddenly used to purchase a flight to Europe, that's going to raise some red flags.

Speaking of Europe, the other big factor in banks' risk equations is whether you're making a purchase in a new area. I bought a computer just days after moving from Boston to New York, and had to confirm to the bank that I was indeed trying to make the purchase. Levin likewise says that making purchases in two different cities over a short period of time raises suspicions.

"I go from New York to California a lot, and invariably someone will call me [from the bank], " he says. Since one person can't go shopping in New York and California at the same time, any time a bank sees multiple purchases in multiple locations in a short period, it's going to be suspicious.

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