Emily Guy Birken

Men, Women, and Credit Cards: How History Shapes Views of Revolving Credit

Men and women don’t follow the same patterns when it comes to credit card behavior. From what they are likely to use plastic to pay for to how many credit cards they carry, men and women as a whole tend to make different choices when it comes to revolving credit. The question is: why is there a gender gap in credit card behavior?

Digging deeper into what these differences are and where they come from can help everyone make better credit decisions, no matter their gender. 

Luxuries vs. Necessities

According to a 2018 study by American University, Hood College, and McDaniel College in Maryland, men are more likely to feel comfortable using debt to pay for luxury items than women, while women are more accepting of using credit cards to bridge income gaps.

This discrepancy may partially stem from the fact that women tend to be more financially vulnerable than men. Because of the gender wage gap, women tend to have less disposable income than men. Additionally, women are more likely to lose their jobs in a recession, as was made clear with the disproportionate level of female job loss during the 2020 pandemic.

All of these factors add together to make women more cautious about using plastic to pay for luxuries, while men tend to be more insouciant. The American University study found that this caution pays off for women. They tend to use credit cards to cover living expenses when needed rather than pay for luxuries they want, meaning they are more likely to experience financial stability overall. Since women are less likely to go through a cycle of racking up credit card debt for non-essentials then working to pay it off, they have more financial flexibility when things are going well and less to pay for when things are going poorly.

Chasing Rewards

Men are more likely to buy with plastic and spend more than they intended in order to receive rewards from their credit card. A 2018 Finder.com study found that 51% of men made a credit card purchase simply for the points they’d earn, and they spent an average of $1,291.88 annually. In contrast, only 43% of women made purchases to earn rewards, and their average spending was $1,059.66 per year. Men were more likely than women to spend more in 9 out of 11 spending categories, including travel, dining out, computers/TV, household items, and shoes. The only two categories where women outspent men were groceries and cosmetics.

Credit card rewards programs are set up to trigger a number of cognitive biases, but the fact that they are a type of gamification may help explain why men are more likely than women to chase rewards. Studies have shown that women are more likely to engage with games that feel “playful,” whereas men like to engage with more competitive games. Though earning rewards is not a clear-cut competitive game like mowing down Nazis in Call of Duty, there is a competitive aspect to the rewards system. Will you be able to beat the average credit card user or your buddy at the office by earning enough points to fly to Hawaii for free?

Since women are less likely to feel excited at the prospect of competition, they are also less likely to make purchases just for the rewards, which is better for their bottom line.

Carrying Multiple Cards

In 2015, an Experian study found that women have 23.5% more open credit cards than men do — a difference of 3.7 cards for women versus 3 cards for men. This is one gendered credit card pattern that is not clearly beneficial or detrimental to either sex. That’s because carrying multiple cards could potentially lead to overspending in the wrong hands — but having multiple cards could lower your overall utilization ratio, which could improve your credit score.

There’s no clear consensus on why women tend to carry more cards than men. While some suggestions for this discrepancy are based on the fact that women tend to be the designated shopper in families and heterosexual couples, it’s unclear if this stereotype explains this difference. Since women do tend to be more financially cautious than men, it is also possible that women open more accounts to spread out the financial risk of credit cards.

Contextualizing Gendered Differences: Credit Card History

While there are a number of gendered differences in credit card behavior, the fact that women have only been legally allowed to own credit cards without a male co-signer since 1974 is an important historical context to the variations in male and female credit card behavior. There are women alive today who were not allowed to carry their own credit cards without a man to vouch for them, which certainly affected their attitude toward and use of credit in their own lives.

This relatively recent gatekeeping against women-owned credit cards very well may have trickled down to much younger generations in the form of motherly and grandmotherly advice. Modern women’s pragmatic approach to credit card usage may have roots in their mothers’ suggestions about how to handle finances in a world that only recently allowed women full access to credit. Additionally, though credit card access has become much fairer than it was prior 1974, the fact that lending is based upon income means women as a whole still have less access than men do because of the gender wage gap.

This may help explain why women are less likely to charge for luxuries than necessities, chase rewards points, or carry only a minimum number of credit cards. Using plastic to smooth over income gaps, refusing to be seduced by points, and taking full advantage of multiple cards are the actions of those who don’t take access to credit cards for granted.

Making Credit Work For You

Credit cards, like money itself, are simply a construct we have all agreed to follow. And banks and lenders currently make all the rules. That means they can manipulate us to make ill-considered purchases seem rational, trigger our cognitive biases to get us to spend, and consistently tempt us with new cards to add to our wallets. They even make the rules that determine who is allowed to borrow and who is not — although those rules are much fairer than they once were.

This is why it’s time for Fintechs like Unifimoney to launch new and interesting credit card models. The forthcoming Unifimoney Visa card will be different, not only because it will be made from ocean-bound plastic so you can feel good about using it, but because it will provide borrowers with a simple, safe, and valuable tool to build wealth. Rather than a card that tries to trick you to spend more than you should, this card will allow you to be in control of your finances and make clear-eyed decisions about your money.

Providing a credit card that helps borrowers feel confident about making good financial choices seems like the best way to bridge the gap between male and female credit card behavior. That’s something that everyone can agree on.

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The above does NOT constitute an offer, solicitation of an offer, nor advice to buy or sell specific securities. The opinions listed above are not the opinions of Unifimoney Inc. or Unifimoney RIA, Inc. but represent the opinions of independent contributors. These contributors may or may not hold positions in the stocks discussed. Investors should always independently research any stocks listed and form their own opinions, while recognizing that any investments made may lose value, are not bank guaranteed and are not FDIC insured.