Millennials and credit card use

[Credit_hawk]

Hey, no harm no foul. I was just trying to avoid conflict. Wasn't trying to be a jerk lol. You

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@Dalmus wrote:

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@Credit_hawk wrote:

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I would stay away from any political commentary. They don't allow it and for good reason. Four pages of other people managed to talk about it without slipping political talking points in there.

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 Yes, you are correct.  I didn't mean to say anything to start a discussion about politics, and I have edited my reply accordingly.

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made good points.

[Closingracer99]

I am a Millennials and I use my cards about 96% of the time. One diner I go to often takes Cash only and i usually buy small stuff with cash if I remember.

[greasypeanut]

ill share my experience as a 28 year old living in southern california. i bring up so cal because traveling for work to other areas of the US, us so californians really try hard to keep up with the joneses in comparison to other places, so thus your own observations may differ

in my observation, education level is a key factor in credit usage. people who regularly use credit cards are relatively more responsible with most aspects of their life which ultimately helped them become more successful.

in general

-all my friends who went to UC schools (highest CA higher education tier, think Cal, UCLA or my own lowly UCR) or higher prestige schools all have credit cards and use it to maximize points. all these kids jumped on the CSR bandwagon, myself included. no one has gotten into any trouble and all of them put money into 401ks 

-friends who went to CSU schools (middle tier) are scattered in credit usage, some have them and some never have

-i have friends who went to a junior college or just have a high school education who are in severe trouble with credit. note that i didnt say those friends never had credit cards, they all did, but they all got in trouble. 

i can understand the argument about kids seeing their parents struggle with debt and thus become credit-averse. I have heard that argument but i also have seen some of those same kids grow up and use credit cards all the time. myself included, my parents had filed a bk during my teens. i got my first credit card at 18 because everyone else at my work at the time (best buy) got one. 

so to bring up the OPs prediction that credit card usage will become uncommon in the future. i dont agree with that, population is only growing and there are plenty of impressionable kids who are just one kardashian/kanye west credit card advertisement from applying for a card and getting themselves in trouble. and then on the flipside, kids who are waiting until their credit score is good enough to jump on whatever the next CSR bandwagon is and travel the world using those bonus points.

[Anonymous]

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@Anonymous wrote:

- Let's be brutally honest here and tell the truth: 90% of us would not give a flying fudge about credit cards if it weren't for one thing and one thing only: rewards. I would LOVE to use a debit card for everything (except maybe online purchases, though even that could be remedied if banks would implement zero-liability fraud for debit) and the sole reason I play the credit card game is to earn points, miles, and cash. That's it. I've never carried a penny of a balance, never paid an interest charge, never have been late. So, for millennials who don't see enough value in complicated points earning systems, trying to redeem airline miles or hotel points, etc, why would any of them give up the convenience of debit and the guaranteed financial responsibility that comes with it.

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Really? You don't think anyone cares at all about 120 days accidental damage protection, 24 months extended warranty, price protection, return guarantee, or rental car insurance coverage?

I must admit, I really like rewards programs and exploit them to the max, but even if all rewards were to disappear, I'd still use a credit card for every purchase.

In fact, when I started using credit cards over 30 years ago (admittedly I'm far from a millenial), there were no rewards programs.  I got 0% on every purchase!  But I still used a credit card for every purchase I could.  Now at that time, it was mainly to take advantage of float. Why would I want to shell out money now when it could remain in my bank account earning 7% interest for the next 30-60 days? With deposit rates now at around 1%, the "float" benefit is pretty lame, though I still stick to it on principle.  But over the years, benefits such as rental car coverage, extended warranty, and purchase protection became more and more common, which made making a credit card even more sensible.  Rewards are a relatively new phenomenon.  But the other benefits would be there even if rewards evaporated.

Maybe those "extra" credit card benefits I mention at the top don't get enough billing, but they seem like a really good reason to use credit cards for everything.

Chris.

[Anonymous]

For what it's worth I've run into enough places that use dialup for their terminals or otherwise have slow processing that I'm not surprised that issuers have to offer as good rewards as they do. I'd probably be using cash way more often otherwise. 

[Anonymous]

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@Anonymous wrote:

Really? You don't think anyone cares at all about 120 days accidental damage protection, 24 months extended warranty, price protection, return guarantee, or rental car insurance coverage?

I must admit, I really like rewards programs and exploit them to the max, but even if all rewards were to disappear, I'd still use a credit card for every purchase.

In fact, when I started using credit cards over 30 years ago (admittedly I'm far from a millenial), there were no rewards programs.  I got 0% on every purchase!  But I still used a credit card for every purchase I could.  Now at that time, it was mainly to take advantage of float. Why would I want to shell out money now when it could remain in my bank account earning 7% interest for the next 30-60 days? With deposit rates now at around 1%, the "float" benefit is pretty lame, though I still stick to it on principle.  But over the years, benefits such as rental car coverage, extended warranty, and purchase protection became more and more common, which made making a credit card even more sensible.  Rewards are a relatively new phenomenon.  But the other benefits would be there even if rewards evaporated.

Maybe those "extra" credit card benefits I mention at the top don't get enough billing, but they seem like a really good reason to use credit cards for everything.

Chris.

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Of course people care about those things (myself included), but there are debit cards that offer some or all of what you mentioned (off the top of my head, Fifth Third), and these are relatively easy benefits to offer especially since they are usually bundled with the Visa/Mastercard network which most debit cards are already a part of. I would agree with you that more often than not, credit cards happen to offer more options in terms of ancillary perks such as these, outside of any rewards program.

My bigger point is that credit cards earn higher swipe fees than debit does, and that allows the providers to offer the sort of "rewards"/perks/benefits that might entice users who otherwise would be more satisfied with debit to switch to credit instead. Sure, some people might like the 30-60 day float of credit, but I'd say they are far outnumbered by those (including, apparently, most millennials) that would gravitate towards debit for the no-fuss ability to budget/manage money without worrying about a credit card bill that will come due two months from now. I know if there were a CSR-type debit card that earned points and threw in all the bells and whistles of my CSR, I'd be the first to jump on the debit bandwagon again.

If you really think about credit vs. debit usage, the idea of credit really only makes sense for what it was designed for - charging items you intend to pay for over time, and making monthly payments to the provider until it's paid off. For those of us who PIF (which I surmise you do as well), it makes a lot more sense to just pay the money when the transaction occurs rather than at some arbitrary point 1 or 2 months after the swipe takes place. That is exactly why millennials are gravitating towards debit usage even when they have one or more credit cards, as this thread seems to demonstrate.

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

Really? You don't think anyone cares at all about 120 days accidental damage protection, 24 months extended warranty, price protection, return guarantee, or rental car insurance coverage?

I must admit, I really like rewards programs and exploit them to the max, but even if all rewards were to disappear, I'd still use a credit card for every purchase.

In fact, when I started using credit cards over 30 years ago (admittedly I'm far from a millenial), there were no rewards programs.  I got 0% on every purchase!  But I still used a credit card for every purchase I could.  Now at that time, it was mainly to take advantage of float. Why would I want to shell out money now when it could remain in my bank account earning 7% interest for the next 30-60 days? With deposit rates now at around 1%, the "float" benefit is pretty lame, though I still stick to it on principle.  But over the years, benefits such as rental car coverage, extended warranty, and purchase protection became more and more common, which made making a credit card even more sensible.  Rewards are a relatively new phenomenon.  But the other benefits would be there even if rewards evaporated.

Maybe those "extra" credit card benefits I mention at the top don't get enough billing, but they seem like a really good reason to use credit cards for everything.

Chris.

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Of course people care about those things (myself included), but there are debit cards that offer some or all of what you mentioned (off the top of my head, Fifth Third), and these are relatively easy benefits to offer especially since they are usually bundled with the Visa/Mastercard network which most debit cards are already a part of. I would agree with you that more often than not, credit cards happen to offer more options in terms of ancillary perks such as these, outside of any rewards program.

My bigger point is that credit cards earn higher swipe fees than debit does, and that allows the providers to offer the sort of "rewards"/perks/benefits that might entice users who otherwise would be more satisfied with debit to switch to credit instead. Sure, some people might like the 30-60 day float of credit, but I'd say they are far outnumbered by those (including, apparently, most millennials) that would gravitate towards debit for the no-fuss ability to budget/manage money without worrying about a credit card bill that will come due two months from now. I know if there were a CSR-type debit card that earned points and threw in all the bells and whistles of my CSR, I'd be the first to jump on the debit bandwagon again.

If you really think about credit vs. debit usage, the idea of credit really only makes sense for what it was designed for - charging items you intend to pay for over time, and making monthly payments to the provider until it's paid off. For those of us who PIF (which I surmise you do as well), it makes a lot more sense to just pay the money when the transaction occurs rather than at some arbitrary point 1 or 2 months after the swipe takes place. That is exactly why millennials are gravitating towards debit usage even when they have one or more credit cards, as this thread seems to demonstrate.

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OK, I guess to the OP's point, I have a long way to understanding the mindset of the millenial, lol.

To me, the idea of someone letting me use their money, for free, for some amount of time, is hard to resist. It seems silly to refuse it.

And on the other hand, the idea of paying interest on a credit card to pay something over time, seems equally ridiculous. Unthinkable, really. At least that was what I was taught. You put purchases on a credit card, you get the monthly statement, and you make a payment of the entire balance due by the due date, without fail, every month. That is how you use credit cards. That is the only way to use credit cards.  You don't *not* PIF, just like you don't go waterskiing on an active lava field, you don't gargle gasoline, you don't go into a biker bar dressed as tinkerbell. Sure, you could, but why would you want to?

Chris.

[iced]

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@Anonymous wrote:

 

If you really think about credit vs. debit usage, the idea of credit really only makes sense for what it was designed for - charging items you intend to pay for over time, and making monthly payments to the provider until it's paid off. For those of us who PIF (which I surmise you do as well), it makes a lot more sense to just pay the money when the transaction occurs rather than at some arbitrary point 1 or 2 months after the swipe takes place. That is exactly why millennials are gravitating towards debit usage even when they have one or more credit cards, as this thread seems to demonstrate.

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People will choose whatever they feel like going with, and that's cool. Nobody's going to dispute that.

However, I find it sad to think that some people think logging in to an app once a month to pay a CC bill (which takes less time that it does to post something on Facebook) is somehow not worth the effort.

I'm reminded of a NY Times article from this early year that published a 2015 study showing almost 40% of millenials don't like cereal for breakfast because it's too inconvenient to clean up afterwards.

[Anonymous]

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@greasypeanut wrote:

ill share my experience as a 28 year old living in southern california. i bring up so cal because traveling for work to other areas of the US, us so californians really try hard to keep up with the joneses in comparison to other places, so thus your own observations may differ

in my observation, education level is a key factor in credit usage. people who regularly use credit cards are relatively more responsible with most aspects of their life which ultimately helped them become more successful.

in general

-all my friends who went to UC schools (highest CA higher education tier, think Cal, UCLA or my own lowly UCR) or higher prestige schools all have credit cards and use it to maximize points. all these kids jumped on the CSR bandwagon, myself included. no one has gotten into any trouble and all of them put money into 401ks 

-friends who went to CSU schools (middle tier) are scattered in credit usage, some have them and some never have

-i have friends who went to a junior college or just have a high school education who are in severe trouble with credit. note that i didnt say those friends never had credit cards, they all did, but they all got in trouble. 

i can understand the argument about kids seeing their parents struggle with debt and thus become credit-averse. I have heard that argument but i also have seen some of those same kids grow up and use credit cards all the time. myself included, my parents had filed a bk during my teens. i got my first credit card at 18 because everyone else at my work at the time (best buy) got one. 

so to bring up the OPs prediction that credit card usage will become uncommon in the future. i dont agree with that, population is only growing and there are plenty of impressionable kids who are just one kardashian/kanye west credit card advertisement from applying for a card and getting themselves in trouble. and then on the flipside, kids who are waiting until their credit score is good enough to jump on whatever the next CSR bandwagon is and travel the world using those bonus points.

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As a product of California public education myself I can corroborate this datapoint. I think credit and credit card usage is more tightly correlated with income than educational attainment, but naturally income and educational attainment are themselves correlated. For example someone coming out of CSU with a lucrative compsci degree may end up more financially stable than someone out of UC with an art degree. But on the general I think the trend is valid.

Something else to note: California has more immigrants than other parts of the U.S., and other countries tend to be more cash and debit driven than the U.S. Even when those immigrants and their children begin using credit cards, they may be more likely to use them as charge cards (PIF) due to cultural habits and values.

[Anonymous]

This thing is like 8 pages long not sure if anyone will read my comment. LOL 

Hi, I am in my 30s. Just last year was when I got my first credit card since my early 20s (think 18-21). Around the age of 21 we (husband and I ) were broke and using credit. We didnt know better and neither did we have self-control. Around our 30s was when we had finally saved money, have a large amount in retirement, purchased our dream home (second home), and felt discipline enough. Just last year was when we got our first credit card after 10 plus years. It felt brand new again and this time very different. 

I was scared. Husband was scared. But since having opened so many credit cards I feel like we have more options. Before we paid cash for everything. Now, I have cash back rewards sitting in my credit card accounts. I have one free airfare, two discount codes for airfare and some hotel stays. Just racking up points on everyday spend such as groceries, household items and more that has been budgeted in my YNAB makes a huge difference! The list goes on and on. It's nice to have credit cards and use the offers and rewards. When I was paying cash, I didn't get any of those benefits. 
The other day, I had a fraud charge on my Citi card. They notified me, canceled the card, and sent me out a new one. Bank of America took over 30 days to investigate a fraud charge for 140.00.