“The financial services industry repeatedly wants us to be shocked — shocked! — that younger generations don’t want anything to do with credit cards.
Time and again, the reasons for shunning those cards are less than shocking.
According to a Bankrate survey, 64% of Millennials, ages 18 to 29, do not own a credit card. That compares to 55% of 30- to 49-year-olds who have credit cards, 62% of people age 50 to 64 and 68% of those ages 65 and older.”
That’s the opening to a very interesting article on the continued reluctance of younger consumers to utilize credit cards. The article goes on to cite numerous data points suggesting why Millennials might be so reluctant.
“By the end of 2015, according to the Federal Reserve Bank of New York, total U.S. credit card debt hit $733 billion. That’s up $33 billion from a year earlier, which put total revolving debt at $935.6 billion in December. In total, that’s up 5.1% from a year earlier despite interest rates rising from an average 11.91% to 12.09% during that time.
The average household with credit card debt now owes $7,879 — or just $500 less than credit card ratings and analysis site CardHub considers unsustainable for a median household income of little less than $52,000. On top of that, according to the Federal Reserve Bank of New York, roughly 8% of all credit card bills are more than 90 days past due — far worse than the percentage of mortgages (2.3%), home equity loans (2.4%) and car loans (3.4%) similarly behind.
Meanwhile, if you’re in that younger demographic, there’s a strong chance that you’re laden with student loan debt as well. According to the Federal Reserve Bank of New York, total student loan debt reached $1.23 trillion by the end of 2015. That’s up $75 billion from a year earlier and is the second largest pile of U.S. consumer debt behind mortgage debt. (at $8.25 trillion, up $79 billion from 2014).”
Given these macro-level statistics, it is perhaps unsurprising that 64% of consumers aged 19-34 told Experian in a survey that they consider credit cards dangerous. For issuers looking to bring younger consumers into their portfolios, this is a problem that needs to be addressed.
Overview by Alex Johnson, Director, Credit Advisory Service at Mercator Advisory Group
Read the full story here