The future of credit cards is not in the hands of millennials; at least not until they hit their mid-thirties.
- Just one out of three millennials carries plastic, according to a Bankrate.com survey, compared to the majority of older Americans. In addition, a Fed survey found the 18 to 24 demographic preferred to pay cash more than others.
- And if they do carry a card, it tends to be of the prepaid or debit variety, TD Bank found.
- Millennials are more likely than older generations to have student loans to pay. About 41 percent of them held such debt, according to a 2015 Pew report. That compares to, at their peaks, 26 percent for Generation X; 13 percent for Baby Boomers; and 3 percent for the Silent Generation.
Neither my three college-educated adult kids nor I owe a dime in student loan debt. Our household is happy to say that we have nothing to do with the $1.5 trillion issue. Between the three, there are 2 professional licenses, 1 Master in Accounting, 2 Bachelors degrees, 1 CPA, 1 BA in (extended) process, 1 Master in Education in process.
- A breakdown of balances by age suggests that the older people get, the more they rely on credit cards. A FICO study showed 18- to 24-year-olds had an average balance of just over $2,000. With 25- to 34-year-olds, the number almost doubled, said Ethan Dornhelm, vice president of Analytics and Scores from FICO.
Perhaps I am like a vegan butcher, I use credit cards but rarely revolve debt. I might sneak in and take advantage of a 0% offer by a card issuer, but short of that I don’t like the idea of paying interest unless I have to.
Hope the kids keep the same perspective.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group
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