Credit cards are the number one payment method in America, yet the majority of people don't understand how they work, a survey revealed.
NextAdvisor surveyed adults 18 and over to see how much they knew about their credit cards. Participants in the survey were asked to recite their annual percentage rate and credit card limit.
"To our surprise, most people didn't know the basics about their card, such as their exact APR and credit limit. In addition, those surveyed are even making two credit card mistakes that could have a negative effect on their credit scores," NextAdvisor said.
Those surveyed were broken down into six age brackets. Almost half of the people in all six groups didn't know their APR. In the youngest group, ages 18 to 24, 66 percent of people didn't know their APR.
The survey also showed an increase in credit card knowledge in older participants.
NextAdvisor's survey pointed out the two biggest mistakes credit card holders make - not using balance transfers and cancelling old, unused cards.
A balance transfer is important because it allows credit card holders to transfer the full or partial balance to a different credit card that has a lower APR, which saves money in the long run. The survey found that 68 percent of people have never completed a transfer, or didn't know how to complete one.
Cancelling old, unused credit cards is bad for users because it lowers the total available credit, so it appears that a higher percentage of credit is being used, which, in turn, hurts the overall credit score. The survey found that 52 percent of people frequently make this mistake.
