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Millennials and credit card use

Frequent Contributor

Re: Millennials and credit card use

I love these kind of conversations. Makes you really think. We discuss this a lot in our Dave Ramsey and YNAB Facebook groups.
I go out to eat with friends after. All are around my age-the millennials. We love being millennials.
None of my friends use credit cards. They all showed me their one credit card which was capital one and another from a credit union.
I think most just don't know how to use these perks. I learned everything about credit cards because of this wonderful forum. No other forums or groups taught me anything. Only about budgeting the money I already have.

One another note, I agree with one of the commenter who said that most who do use credit cards tend to have more liquid assets; savings, investments, 401k, etc.
While many of my friends are professionals, most do not have savings or 401k. Much less own a home. Remember that millennials are putting off savings and owning to travel more. There are tons of articles on this. And I see it in my friends. I'm different. I prefer to hold off a little to save for our future, retirement and pay off the home.
Message 141 of 149
Contributor

Re: Millennials and credit card use


JellyBeanGurl111 wrote:
I love these kind of conversations. Makes you really think. We discuss this a lot in our Dave Ramsey and YNAB Facebook groups.
I go out to eat with friends after. All are around my age-the millennials. We love being millennials.
None of my friends use credit cards. They all showed me their one credit card which was capital one and another from a credit union.
I think most just don't know how to use these perks. I learned everything about credit cards because of this wonderful forum. No other forums or groups taught me anything. Only about budgeting the money I already have.

One another note, I agree with one of the commenter who said that most who do use credit cards tend to have more liquid assets; savings, investments, 401k, etc.
While many of my friends are professionals, most do not have savings or 401k. Much less own a home. Remember that millennials are putting off savings and owning to travel more. There are tons of articles on this. And I see it in my friends. I'm different. I prefer to hold off a little to save for our future, retirement and pay off the home.

that is true, I hold only about 30% of my earnings into savings....but if I'm going to be traveling why not reap the benefits and perks that come w/ having good credit / credit cards? Will be interesting to see how this landscape all unfolds in the next 10 years of my life.




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Message 142 of 149
Established Contributor

Re: Millennials and credit card use


JellyBeanGurl111 wrote:
I love these kind of conversations. Makes you really think. We discuss this a lot in our Dave Ramsey and YNAB Facebook groups.
I go out to eat with friends after. All are around my age-the millennials. We love being millennials.
None of my friends use credit cards. They all showed me their one credit card which was capital one and another from a credit union.
I think most just don't know how to use these perks. I learned everything about credit cards because of this wonderful forum. No other forums or groups taught me anything. Only about budgeting the money I already have.

One another note, I agree with one of the commenter who said that most who do use credit cards tend to have more liquid assets; savings, investments, 401k, etc.
While many of my friends are professionals, most do not have savings or 401k. Much less own a home. Remember that millennials are putting off savings and owning to travel more. There are tons of articles on this. And I see it in my friends. I'm different. I prefer to hold off a little to save for our future, retirement and pay off the home.

As Dave Ramsey says - "Live like nobody else so you can live like nobody else." I've never really looked at people's spending and saving habits. Maybe I should. I am a Baby Boomer (barely - 3/1964). My parents are children of the depression and WWII. They saved, saved, and saved again. I was told to do the same thing and my parents led by example. I do but not to the extent that they did. Nope, I spent more on my kids (Millenials) and wanted them to have everything I didn't as a child. I didn't teach them the importance of saving, the value of a dollar, why work is important, etc. Nope - gave them everything their little hearts desired thinking I was doing them a favor. Now they don't know what savings means, have no emergency fund, and don't see why planning for retirement at 35 is at all important. I never taught them delayed gratification so as adults they don't see why they can't have that cruise, those clothes, or that car, appliance, etc, right now. At least they aren't asking me for money. Yet.

 

I really think Millenials are putting off saving because they were taught that saving isn't important. Give yourself what you want when you want it. Learned it from their parents. After all, we gave them what they wanted when they wanted it.

Over $182,000 in credit across 12 cards.

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Message 143 of 149
Frequent Contributor

Re: Millennials and credit card use

I'm late to this conversation so I didn't read every page. 

 

My Take: 

 

Its not that Millennials, in my view, are shying away from using Credit. Its that they're not serious credit card shuffling junkies, like generations before them.

 

Millennials, and this doesn't just pertain to Millennials, even right here on this form, I myself too (not a Millennial) want simplicity over everything else. We are seeing a wave forming moving to 'Simplistic Trumps All' or at least is a top requirement. People hate hassles, they hate complicated. Which is why we're seeing the slow death of Category Cards, nobody wants to bother with Quarterly Cats, Limits to Cashback, and needing to sign up for it each time, its all become just a hassle. On the other end you're seeing the rise of the 1.5 and 2% Unlimited Cashbacks, its simple unlimited and you don't need think or remember anything.

 

As I've noticed in myself, on this board, and out in general (Millennials as such) .... People generally want to carry 1 or 2 Everyday cards that they don't have to think about which one to use, they throw all over their everyday spending on those 1 or 2 cards and collect the rewards and PIF ... SIMPLISTIC .... Guys still shuffling 5-6 cards through Everyday spending, I don't know how you maximize your returns when your Everyday spending is spread over that many cards, it just dilutes the rewards IMO. Millennials (Not just them but since they're the topic) just don't want that hassle. The only >2 Everyday cards hassle I see being worth it is CSR/CSP - Freedom - Freedom UTLD because while they're 3 separate cards, your Pooling your UR points into one basket so the rewards are just a easy to manage as if it was just 1 card. And really even if you're doing the Chase "Trifecta" the Freedom is only being used in situations where 5% category at the time is worth something. Otherwise you're still mostly using just 2 Everyday cards.

 

This is where I think we're at in America now with Credit Cards. People wasn't hassle free simplicity while earning something for their spending. What I do think is unique to Millennials is settling for Plain-Jane Credit Credit Cards with No Rewards and Crappy Limits. My DD Boyfriend still uses a No-Rewards BoA Visa he first got when he began building, that was 5 years ago, his credit is pretty good now. He still uses that card for his Everyday card and PIF at statement time. My DD tried to get him to at least get a BoA card that gives him some type of Cash Back, she told him you need to be rewards for the loyalty and the amount of spending you put through your card. He doesn't want to bother, doesn't care.       

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Message 144 of 149

Re: Millennials and credit card use

I'm a millenial and just got my first credit card last October. I spent most of my adult life actively avoiding having a credit card. I think something a lot of people overlook is that millenials, especially those of us on the older edge of the generation, grew up during the 90s, where we heard about credit card debt ruining lives in the news, on TV shows, the radio, etc. And then we witnessed the crash, and some of us were adults when it happened so we had to live through it. Since then, it's been extremely difficult to get approved for cards the way people used to be able to.

 

I know up until very recently, I was somewhat terrified to think of getting credit cards. I've never really had an issue with money itself... even making very little, I managed to get by. But growing up in the time that I did, I was left the surety that no matter how responsible I was or how much I made, having a credit card would be DOOM for me.

 

I only got it because I kept getting told "it's not that you have bad creditl.. you just don't have any credit", and I'm in a position where I want to buy a condo in the next 2-3 years. I realized that having credit cards was a necessity for no other reason than if I didn't establish a credit history, and raise my scores (and get a FICO score at all), there was no way I'd ever qualify for a loan to do so.

 

Also: my debit card has cash back and discount rewards on it. They're not as great as the ones that come with my credit cards, admittedly, but when you compare the lack of an interest rate with the rewards I get, they're pretty sweet, over all.

 

TL;DR: Millenials grew up during pretty awful financial struggles, we absorbed the stress and fear from those struggles, and they've made us wary of the trouble you can get in to with a credit card.

Starting Score:EQ - 576 | TU - 564 | EX - 587 (Apr 2017)
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Message 145 of 149
Valued Contributor

Re: Millennials and credit card use


RedheadInMiami wrote:

I'm a millenial and just got my first credit card last October. I spent most of my adult life actively avoiding having a credit card. I think something a lot of people overlook is that millenials, especially those of us on the older edge of the generation, grew up during the 90s, where we heard about credit card debt ruining lives in the news, on TV shows, the radio, etc. And then we witnessed the crash, and some of us were adults when it happened so we had to live through it. Since then, it's been extremely difficult to get approved for cards the way people used to be able to.

 

I know up until very recently, I was somewhat terrified to think of getting credit cards. I've never really had an issue with money itself... even making very little, I managed to get by. But growing up in the time that I did, I was left the surety that no matter how responsible I was or how much I made, having a credit card would be DOOM for me.

 

I only got it because I kept getting told "it's not that you have bad creditl.. you just don't have any credit", and I'm in a position where I want to buy a condo in the next 2-3 years. I realized that having credit cards was a necessity for no other reason than if I didn't establish a credit history, and raise my scores (and get a FICO score at all), there was no way I'd ever qualify for a loan to do so.

 

Also: my debit card has cash back and discount rewards on it. They're not as great as the ones that come with my credit cards, admittedly, but when you compare the lack of an interest rate with the rewards I get, they're pretty sweet, over all.

 

TL;DR: Millenials grew up during pretty awful financial struggles, we absorbed the stress and fear from those struggles, and they've made us wary of the trouble you can get in to with a credit card.


Credit Cards are only as dangerous as you make them...handle them responsibly, and they are great tools for rewards, extending warranties, purchase protection, etc. in addition to leading to high scores. If used irresponsibly they can and have led to financial ruin, if you cannot control the person you see in a mirror, avoid credit cards. For what it is worth...I am a baby boomer, and neither my generation, nor the millenials have seen really awful financial struggles. My mother who is 89 grew up in the great depression...that was awful financial struggles. Comparatively, my generation and yours has been a cake walk.




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Message 146 of 149
Valued Contributor

Re: Millennials and credit card use


Kidcat wrote:
 

When my sons went to college there were banks but only offering checking/savings accounts.  Both my kids know how to balance a checkbook and use Ynab for their budget. The oldest has a Chase Freedom which I insisted he get, the other has a Discover (both low limit cards) and I have them as AU for emergencies.

 

The one who only has the Chase Freedom just paid off his first car, participates in 403(b) (he's a TA), has savings, and oh by the way is getting a PhD in Classics on fellowship.  He's doing something right, but credit cards are just not on his mind right now in a real sense.  And the major has nothing to do with financial literacy.  How many financial planners do I know who have debt!


 

You’re on to something. Paraphrasing an article today on science, it’s not knowledge but curiosity that makes us more likely to accept financial truths. Unless you are open-minded, you cannot grasp something as a fact if it in any way undermines your beliefs.

Message 147 of 149
Frequent Contributor

Re: Millennials and credit card use


atomicfront wrote:

Maybe they are so far behind on their huge student loan debt that they can't quailfy for credit cards 


I have huge student loans, but regularly paying required payments on them has actually given me rather good credit scores and the fact that I have so many works in my benefit for average age of accounts. Having lots of student loans, although far from ideal, doesn't have to ruin credit. 

American Express Blue Cash Everyday, $18.4k limitCapital One Quicksilver, $11k limitChase Amazon Rewards, $6k limitBarclay Ring, $2.5k limit
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Message 148 of 149
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Frequent Contributor

Re: Millennials and credit card use


SEMO wrote:

Maybe I am being naive, but I would think as a 17 or 18 year old I would have been very interested in gaining knowledge on credit in order to hopefully set me up for success. I think many young people have a lack of understanding for credit until it is too late and then they have to live with the reprocussions for awhile. I would think school's could easilly fit a semester long "Credit 101" course in their schedule. Also, I wouldn't necessarily only focus on credit cards, rather interest rates, utilization, proper credit card use. I think if someone laid out the costs associated with having a higher interest rate due to bad credit versus the costs associated with good credit and low rates, that it would stick with me and urge me to be proactive in my credit journey.

 

In my line of work I see too many college students with 25k worth of student loan debt, but with those loan's reporting, although deffered, give individuals enough credit in order to start getting credit card's... next thing you know they are 21 year's old with student loan debt, and a few maxed out credit cards, and it's ultimately too late for many people at that point. I would rather be proactive in teaching credit in order to set young adults and teenagers up for success, although it is ultimately up to the individual to apply the tools and knowledge they learned with this class in order to be successful.


 I agree that a class would be helpful, but I wouldn't limit it to credit. Instead, have a financial literacy class that covers budgeting, credit, loans, savings, retirement, and the stock market. That would allow people to be at least somewhat familiar with a lot of the financial forces that will impact their lives. 

American Express Blue Cash Everyday, $18.4k limitCapital One Quicksilver, $11k limitChase Amazon Rewards, $6k limitBarclay Ring, $2.5k limit
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FICO Scores: TransUnion 775, Experian 797
Message 149 of 149