Millennials and credit card use

[slayerbizkit]

I'm 30 and I've schooled my younger brothers on the importance of having a good credit score and how to get there, but, All 4 of us avoid credit at almost all costs. 3 out of the 4 of us paid for our vehicles in cash. We only sign up for credit cards with obscene bonus points and then ditch them before the annual fee comes due. Screw credit cards. A $40 credit card deliquency nearly disqualified me from joining the military @ 18. Believe me, us "Millenials" have seen the carnage that sub-prime lending, ****ty student loans, bank fees, and 100's of other tricks that leave older people broke and penniless on their deathbeds. Compounding interest, stagnating wages, No thnx, I'm no sucker.

[Anonymous]

Im in my 20's and personally the last time I used my debit card was at costco before the switch, which had been its only use for months before that.

Speaking about my age group in general nearly everyone I know uses cash for lack of bank account at all, living paycheck to paycheck with no savings. I guess it helps them stay on top of exactly how much money they have, but I think it's a shame to miss out on all that cash back. Not to mention emrgency funds for when life has other plans.

[Anonymous]

Some people think that credit cards lead to uncontrollable debt and financial ruin while others think of credit cards as a way to get perks on their purchases like cashback, extended warranties, and travel protections. Which assessment is correct? Obviously, both are. The nuance lies in each individual's financial picture and how they think of credit cards as a financial instrument. A credit card customer who carries a revolving balance or who uses a credit card to pay beyond the means of his/her monthly receipts is a very different user than one who pays the monthy bill in full. It's no surprise that when millennials are entering a workforce with record high student loan debts and difficult job prospects that they may bias to the former category.

Personally I never had or used a credit card in college. I paid everything entirely from a debit card, dining plan card, or cash. I was always taught to only spend money I had. It was only when I was buying my first car (after leaving school) that I realized what a problem having an empty credit file was. My first card was a secured card with a $500 limit, like everyone else. Five years after that I applied for only my second credit card, and was instantly approved with a $32k CL. My credit score isn't in the 800s yet, mostly because my average account age is still quite new. Should I have used credit cards in school? I might have used them responsibly and significantly increased my oldest account age, or I might have spiraled into serious debt and ended with a BK. Hard to say, but i'm happy with where I am now.

Millennials are right to be skeptical, but those with a healthy financial picture and good fiscal discipline shouldn't be afraid to use credit cards for their valuable perks. The key is to treat them like charge cards and never carry a revolving balance.

[Anonymous]

Reponsible credit use was something I learned in these forums. I used to nearly exclusively use a debit card tied to a bank account with no perks for using one. Through looking through the personal finance section here, I learned about rewards checking accounts, which I didn't know existed before. Now, using the debit card attached to my rewards checking account earns me $30 a month, and using my cashback credit card earns roughly $15 a month. As others have said, what people need is  not just credit card usage, it's knowledge of financial options to gain or maintain more while risking less. With the stock market having the potential to wipe out money as easy as it generates it and the paltry percentages traditional savings accounts give, it's important to find the best alternative options possible.

[Josh2942]

I'm 21 and only use my debit card for deposits. I own my own business so I have a different outlook than one that's employed. I have over 30 credit accounts no long term debt a 2100 balance out of 235k in credit that I will be paying off tomorrow and a pretty healthy savings thus far. Soused credit as a tool. I'm not scared of it because only I myself can cause debt. If you make smart decisions you don't even think about it as a credit card but as just a form of payment.

[Dalmus]

 I find it interesting reading the several comments here about how the Millenials "don't trust" the banks because of their policies that led to the financial "meltdown" a few years ago.

 The major cause of the meltdown was "loose lending" by banks... But they were "encouraged" to do so rather heavy handidly by the Federal government through rules changes to the CRA and mandates given to Fannie Mae/Freddie Mac.

Edit:  Removed subjective commentary.  Sorry, folks!

[Anonymous]

It depends on the social media circles the individual is running in. If you are a good online Shopper you probably have come across programs and shopping portals to increase savings and therefore know that you can tack on an additional 1,2,3, 5 and even 10% by using a credit card over a debit card in those situations.

The younger Millennials were teenagers when Credit crisis happened so they watched their parents struggle when they were supposedly doing everything right. I can see them being extremely gun-shy and thinking that renting a place for the same price as mortgage in current times is the safe route which it isn't. Rent is going to go up.

Credit cards and taking out loans are not the same thing of course but debt is debt. Treat your credit cards like installment loans, actually be scared of consequences of not paying them and you really have nothing to worry about.

[iced]

I don't think the behavior Millenials have toward credit cards is a product of being a Millennial, but rather a normal phase in the process of credit and lending. When I turned 18 in the 90s (so I'm technically a Gen X'er), I thought credit cards were neat for buying stuff I couldn't otherwise afford. And that's what I did, and then it got me in trouble. I reacted to my situation by being angry at the banks for tricking me and grew to distrust them and entered a phase where I hated credit cards and saw them as terrible. Then I grew a little more, into my 30s, and came to see them as a useful tool when used properly.

In the case of many younger people today, I think that first phase of credit maturity got short-circuited because they watched their parents and older friends get taken to the woodshed in the Great Recession. Now they're in the distrust phase and in several years will start crawling out of their shell to find that using cards only to benefit from what you CAN afford to buy turns them into useful tools.

Of course, I could be wrong and instead I'm dealing with a generation that may be even more jaded than I am.

[Credit_hawk]

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@Dalmus wrote:

 I find it interesting reading the several comments here about how the Millenials "don't trust" the banks because of their policies that led to the financial "meltdown" a few years ago.

 The major cause of the meltdown was "loose lending" by banks... But they were "encouraged" to do so rather heavy handidly by the Federal government through rules changes to the CRA and mandates given to Fannie Mae/Freddie Mac.

Edit:  Removed subjective commentary.  Sorry, folks!

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(Mod Note:  member elected to removed discussion of a political nature.  Thank you for your adherence to the Forum TOS!)

[longtimelurker]

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@Anonymous wrote:

Reponsible credit use was something I learned in these forums. I used to nearly exclusively use a debit card tied to a bank account with no perks for using one. Through looking through the personal finance section here, I learned about rewards checking accounts, which I didn't know existed before. Now, using the debit card attached to my rewards checking account earns me $30 a month, and using my cashback credit card earns roughly $15 a month. As others have said, what people need is  not just credit card usage, it's knowledge of financial options to gain or maintain more while risking less. With the stock market having the potential to wipe out money as easy as it generates it and the paltry percentages traditional savings accounts give, it's important to find the best alternative options possible.

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Yes, people here knocking debit cards tend to forget (or not know about) rewards checking accounts. Consumers Credit Union has a product that tops out at 4.59% on up to $20K (this does require some cc use as well) and that is certainly competitive with a lot of rewards credit cards