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Valued Member
Posts: 51
Registered: ‎03-07-2017
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Re: Millennials and credit card use


r34dy2fly wrote:

Trying to battle fraud with debit card is just painful. Especially since the monetary amount is taken out immediately. Screw that noise. 

 

I try to tell all my friends to convert them over to the CC world so they can get some decent benefits and rewards but... some just... aren't about it. I tell them they're practically throwing money away when its obviously they need every penny but they just don't want to hear it. I'll probably write about it for my dissertation for post-grad for behavior finance and discuss why they're so opposed to it. 


I had this same argument with my brother when I first started getting credit cards. Once I made the decision to begin rebuilding my credit, I got a Cap1 rebuilder card and started reading furiously about credit cards, how to handle them responsibly, their benefits over debit, and how to maximize rewards. At that point was all in. However my brother who at one time in his life spent waaaay too much time listening to Dave Ramsey tried to argue that the benefits of fraud protection were no better than debit or that t wasnt worth it for the potential to go into debt. I tried to tell him about their superiority with responsible use but he did wanna hear it. 

 

Honestly, I think if more young people were to take the time to research how credit cards work and learn the discipline to use them correctly, they'd swap in a heartbeat.

In the Garden until 4/11/2018



Valued Member
Posts: 51
Registered: ‎03-07-2017

Re: Millennials and credit card use


12velectronics wrote:
This thread also proves why Amex is where they're at. Millennials just don't care about that "Amex appearance" so they need to offer products that are more than just based on prestige.

I came across this article yesterday that perfectly supports your statement.

 

https://mobile.nytimes.com/2017/04/14/business/american-express-chase-sapphire-reserve.html

 

I found it an interesting read. AmEx's upper level cards do convey a certain "elite' status to them which I like. Though it seems almost like they have loosened their requirements a bit to compete. Just this past week I got the PRG which I thought would be out of my reach until i was about a 750 score. (I was approved with a 707).

 

In the article, Young moguls talk about using the CSR because its "interesting', not just because it shows a certain status level or that your rich. I dont see american express as a statment of financial power but more, "Hey, I worked my ass off and have pretty good credit." Its not the typical "Amex appearance" as you describe though.

In the Garden until 4/11/2018



Established Contributor
Posts: 747
Registered: ‎11-15-2014

Re: Millennials and credit card use


Ringwraith1986 wrote:

r34dy2fly wrote:

Trying to battle fraud with debit card is just painful. Especially since the monetary amount is taken out immediately. Screw that noise. 

 

I try to tell all my friends to convert them over to the CC world so they can get some decent benefits and rewards but... some just... aren't about it. I tell them they're practically throwing money away when its obviously they need every penny but they just don't want to hear it. I'll probably write about it for my dissertation for post-grad for behavior finance and discuss why they're so opposed to it. 


I had this same argument with my brother when I first started getting credit cards. Once I made the decision to begin rebuilding my credit, I got a Cap1 rebuilder card and started reading furiously about credit cards, how to handle them responsibly, their benefits over debit, and how to maximize rewards. At that point was all in. However my brother who at one time in his life spent waaaay too much time listening to Dave Ramsey tried to argue that the benefits of fraud protection were no better than debit or that t wasnt worth it for the potential to go into debt. I tried to tell him about their superiority with responsible use but he did wanna hear it. 

 

Honestly, I think if more young people were to take the time to research how credit cards work and learn the discipline to use them correctly, they'd swap in a heartbeat.


To be fair, debit cards are supposed to be the same as credit cards in terms of fraud protection--as long as you report the fraudulent charge within 48 hours. Google "Regulation E" and you can read all about it. Cat Very Happy Signature or PIN isn't even allowed to be taken into consideration either, plus the bank is required to give you a provisional credit within a certain amount of time.

 

The main problem with debit cards is what happens until you get that provisional credit. A lot of people live paycheck to paycheck and may find it hard to pay bills if someone steals their money. Of course, that also requires even more focus and dedication to watching your spending if you're in that situation and use a credit card instead;  studies have shown that people spend more with credit cards than debit cards or cash.

Frequent Contributor
Posts: 423
Registered: ‎01-18-2017

Re: Millennials and credit card use


tmiw wrote:

I've recently started paying attention to the card habits of friends in my age group (I'm in my early 30s). What I've noticed so far is that credit cards are seemingly heavily disfavored; even if someone has at least one credit card, debit cards seem to be used for most/almost all purchases. Basically I want to have a discussion to see whether:

 

  1. This is anywhere near representative of millennials at large, and
  2. How/if issuers should respond (and if whatever they're already doing is working).

Personally I can see a future where credit card use is very uncommon. A lot of millennials lived through the financial crisis and saw parents and other family members struggle with debt, not to mention some having large student loan debt. Those early experiences likely resulted in certain habits being ingrained early on (like debit card use over credit card use), which are difficult to change later on. Some ideas for consideration:

 

  1. Adopt true chip and PIN for credit in the style of Diners Club, UNFCU, etc. I've lost count of the number of comments I've read/heard regarding how chip and signature is "useless", which makes me think there is a risk of people beginning to consider debit cards as "more secure" than credit cards (due to being heavily encouraged/required to enter a PIN at some/most stores)--potentially making adoption of credit cards more difficult.
  2. Charge cards. AmEx has a pretty big opportunity here, IMO, as the only issuer of charge cards (that I know of, anyway)--it's just that people are reluctant to pay AFs. A charge card without an AF may do pretty well since it's impossible to go into debt with those. Alternatively, something like Europe's "delayed debit" cards might work too, though I'm not sure how viable those would be.

Thoughts?


 

So, I missed being a Millennial by a few years (if we accept the general norm that the Millennial generation began in 1982) therefore, I have more in common with Millennials (than I care to admit) than I do with my own Gen X generation. 

 

Credit cards becoming uncommon in the future? Perhaps the physical card, yes, but the general concept of a credit "card" no. Yes it is true that Millennials came of age during the Great Recession and witnessed massive financial hardships. Yes, many Millennials have loads of student debt. In my own situation, my mother filed bankruptcy when I was in high school. It was very scary and embarassing. I remember having nightmares that we were at Safeway and when my mom went to pay the form of payment was declined and there were kids from school behind us in line. My point is, even though I saw my mom go through a lot of difficultly, it did not make me steer clear of credit (as is clear by my signature LOL) no, it made me respect it more and use it carefully. When I got my first card 19 years ago at age 18, I made darn sure that I used it carefully so that I never had to go through what my mom went through. Now, at 37, I have build an impressive credit history-something that is basically required in the US unless you have a lot of cash or live in a very small, affordable town. The easiest way to build credit is with a credit card. Over the years rewards credit cards have become the norm. Rather than use a silly debit card, with less protections, I grab one of my credit cards for 1) rewards and 2) added fraud protections. I can't imagine people giving up credit card rewards (especially Millennials, something for nothing right? bwhahahahaha okay bad joke, my applogies). 

 

I totally agree with you that the way the US has done EMV is useless. Without the added protection of PIN, there really does not seem to be much need for the chip except for international travel, where the US cards are still at a loss due to signature rather than PIN authentication.

A charge card is a good idea, but with self control, any credit card can be a "charge" card in that if you pay in full, there is no interest charges. Having said that, I wish Amex would bring back Zync as a no AF cash back card. Depending on the rewards structure, I would be interested. 

 

Anyway, I am responding to OP 6 months late, but since this thread has popped up recently, I felt compelled to respond. 



Established Contributor
Posts: 534
Registered: ‎02-02-2016
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Re: Millennials and credit card use

I'm a millennial, age 27. And proud of it. Anyways, I didn't start my credit history until October 2015. I lived abroad for much of my early 20's, but also I had only ever heard bad things about credit cards and didn't want to get into them. I had no problem running everything on my debit card. That changed when I got back to America and learned about all the travel rewards you could get by using credit cards. So I've been doing that for the past year and a half.

 

Now I only use my debit card for ATM withdrawals. But if it weren't for all the rewards you can get by using credit cards, then I never would have got one.

Valued Contributor
Posts: 1,666
Registered: ‎06-30-2016
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Re: Millennials and credit card use

[ Edited ]

Ringwraith1986 wrote:

r34dy2fly wrote:

Trying to battle fraud with debit card is just painful. Especially since the monetary amount is taken out immediately. Screw that noise. 

 

I try to tell all my friends to convert them over to the CC world so they can get some decent benefits and rewards but... some just... aren't about it. I tell them they're practically throwing money away when its obviously they need every penny but they just don't want to hear it. I'll probably write about it for my dissertation for post-grad for behavior finance and discuss why they're so opposed to it. 


I had this same argument with my brother when I first started getting credit cards. Once I made the decision to begin rebuilding my credit, I got a Cap1 rebuilder card and started reading furiously about credit cards, how to handle them responsibly, their benefits over debit, and how to maximize rewards. At that point was all in. However my brother who at one time in his life spent waaaay too much time listening to Dave Ramsey tried to argue that the benefits of fraud protection were no better than debit or that t wasnt worth it for the potential to go into debt. I tried to tell him about their superiority with responsible use but he did wanna hear it. 

 

Honestly, I think if more young people were to take the time to research how credit cards work and learn the discipline to use them correctly, they'd swap in a heartbeat.


I'm 32 and that kind of attitude boggles my mind. You could easily spend on the credit card only what you had available in your liquid assets, the same as you do a debit card, and reap the benefits.There is literally no reason not to build a great credit history with revolving credit unless you are completely incapable of self-control to spend within your means. I believe that this can be almost entirely eliminated by utilizing secured credit first to feel the weight of spending your own money and paying yourself back.


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Established Contributor
Posts: 780
Registered: ‎03-26-2010

Re: Millennials and credit card use

RE:

 

This is simply a factor of youth and is not unique to millenials.  I can personally attest to the same being true amongst Gen Xers when we were young, and history shows the same was true for the Baby Boomers

 

 

Yes I agree. some millenials tend to think they are special. They are not. Just a younger generation. 

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Re: Millennials and credit card use


East2West wrote:

I only had one credit card for 10 years until I found this place Smiley Very Happy

 

 


Me too Smiley Very Happy And it was maxed out and I was only making the minimum payment.

 

I turned all that nonsense around one year ago next month. I can't put into words how this forum has turned my thinking and financial situation around: paying in full, bank transfer to utilized 0% interest, diversifying types of credit cards used, and earning rewards (a biggy).

 

Today, I am definitely a more savvy and conscientious shopper/spender.


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Valued Contributor
Posts: 2,058
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Re: Millennials and credit card use

Once millennials start families, traditional values such as shared cable and good credit will be noticed.

 

Valued Contributor
Posts: 2,057
Registered: ‎08-13-2007

Re: Millennials and credit card use

I have a daughter that is 24 now. When she was 18, we opened a Master Card account for her with USAA and I paid her bills when the statements arrived while she was in college.

 

Fast forward to today, she has a FICO of 805 (average), a Delta Amex with a $35,500 line, a Barclay arrival + with a $22,000 line, and a USAA Preferred Cash Rewards with a $15,000 line. She also gets a TON of pre-quals in the mail. She pays in full each month and uses her cards in a very smart way.

 

She is now very aware of how imprtant credit and smart use of credit is.

 

She just got a new car and when she saw the 805 at the dealership - she just said "thanks dad".

 

Made my day!  Smiley Very Happy

Ray

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