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Millennials and credit card use

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Anonymous
Not applicable

Re: Millennials and credit card use


@Anonymous wrote:

 

I have been a strong believer that Highschool's should have a REQUIRED class for every graduating senior, in which credit is taught. Showing the importance of good credit and the costs associated with having bad credit, such as higher insurance premiums, higher interest rates, inability to obtain financing and so on and so forth. Credit is such a driving factor in life in many way's that I believe a class taught to all highschool students would be very beneficial to set young adults in the right direction....Think about the economic impact it would have if people were taught the key's and tools to credit success at a young age!


I wholeheartedly agree with this.  It should be the 2010s version of a "Home Economics" class.  No more learning how to bake -- instead learn how to put together a budget and learn how to read a financial contract.

 

I had a pretty heated discussion with a $20M networth engineer/businessman saying that America would be better off if they stressed financial education more than science.  "You'll use your financial knowledge monthly... how often are you going to need to know chemistry".  Being an engineer he didn't like my suggestion of deprioritizing science.

Message 121 of 149
Berk
Established Contributor

Re: Millennials and credit card use


@longtimelurker wrote:

@Anonymous wrote:

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.


The point is that it is as easy to spend way more than your liquid assets, and that's not so possible with a debit card.....out of control credit card debt is hardly unheard of.

 

As I found out when I was about the age of millenials now. Ruined my credit big time. Had issuers giving me credit limits much higher than my self-control could stand. Learned a hard lesson that it took me 20 years to recover from.

 

  

we are WAY too into the benefits of credit cards, and for a sizeable portion, the rewards, while certainly better than 0, aren't really all that significant.   

 

I tend to agree with you here as well. I have three cards that I primarily use. The rest are convenient from time to time - for instance a Best Buy store card offering 0% interest for 24 months for home entertainment purchases of $799 or more. Other than that, I have two cards I use for travel - both Amex and both for the perks that they offer - travel perks more than MR points since the vast majority of my travel is bought and paid for on my company corporate card. Although I do pay bills with them so that I can generate a few points a year. I've got 20K points on one card just from paying bills since the first of the year. My other go to card is my Thank You card that I use for daily purchases and incidentals. I usually get around 20K in thank you points a year that I put towards my Hilton Honors account. Makes it nice to stay in a resort in Orlando for a week or two while we do the tour of the theme parks. I hardly maximize my rewards points. My Discover is keeping my socks company right now although I do pay my sat bill with it. In this stage of life I just find it too much work to try to maximize points. Sacreligious, I know, for some of you, but, hey, its my money and my points (or lack thereof).

 

Don't be a credit card bore!


 

Message 122 of 149
Anonymous
Not applicable

Re: Millennials and credit card use

If you carry a balance, shouldn't you ask youself why? I understand that emergencies come up, and having a line of credit saves some peoples rear ends, but if you use credit like EXTRA MONEY, you're gonna get burned!

Message 123 of 149
Anonymous
Not applicable

Re: Millennials and credit card use

This is why I like my Amex Charge Cards, pay the bill at the end of the month!

Message 124 of 149
Credit_hawk
Established Contributor

Re: Millennials and credit card use


@Anonymous wrote:

@Anonymous wrote:

 

I have been a strong believer that Highschool's should have a REQUIRED class for every graduating senior, in which credit is taught. Showing the importance of good credit and the costs associated with having bad credit, such as higher insurance premiums, higher interest rates, inability to obtain financing and so on and so forth. Credit is such a driving factor in life in many way's that I believe a class taught to all highschool students would be very beneficial to set young adults in the right direction....Think about the economic impact it would have if people were taught the key's and tools to credit success at a young age!


I wholeheartedly agree with this.  It should be the 2010s version of a "Home Economics" class.  No more learning how to bake -- instead learn how to put together a budget and learn how to read a financial contract.

 

I had a pretty heated discussion with a $20M networth engineer/businessman saying that America would be better off if they stressed financial education more than science.  "You'll use your financial knowledge monthly... how often are you going to need to know chemistry".  Being an engineer he didn't like my suggestion of deprioritizing science.


I'm a millennial too. I feel like we're at a confessional at AA and I'm talking the real AA. I don't like the suggestion of deprioritizing science either haha. But I understand your point. There should be a class that teaches financial literacy. However, there are only so many hours in a mandated school day and so many important subjects vying for time. The thing is, most of us inherently know right and wrong and what's responsible vs irresponsible without having to be educated on every topic. It's just some will always act irresponsibly. I don't believe the majority of those that act irresponsibly do so  maliciously in regards to credit. But the end result is the same. There aren't too many people that open credit with the intent of fraud from the outset.

 

I also think a 7 year penalty does nobody any good. There should be a penalty but 7 years is a bit much. I think it may have a reverse effect. Once you get a few charge offs you're pretty much done for so what's the point of trying hard to pay off the others if you're looking at a 7 year stretch. It gets hopeless and overwhelming.

FICO- Experian: 797, TransUnion: 781, Equifax: 804 (Updated Monthly)
Message 125 of 149
Anonymous
Not applicable

Re: Millennials and credit card use

I disagree, I think that time can be made for an economic's/financial responsibility class, although you are absolutley right that some individuals will act irresponsibly regardless of such class or not. However, If the math is laid out in front of them showing the direct cost's of having bad credit verse good credit, I believe more people will act with better intentions.

 

And to say that a person will learn after a few chargeoff's because they will be unable to obtain financing is not true at all. In my field of work I look at people's credit everyday, and the vast majority of them being millenials and it is absolutley scary how irresponsible people are. A few chargeoff's doesn't prevent a 25 year from going to a dealership and obtaining financing through Santander at 25% then letting the car go repo months later.

 

There are many classes that could be replaced by such class, and I think the outcome would be a much more useful and succesful tool.

 

In regard's to your other statement, I believe that a 7 year penalty is fine, I believe any less than that and people become more "comfortable" burning lenders. People have to pay some sort of punishment for their wrong doings. Think about all of the risk that lender's and finance institution's face themselves with, it would not be fair at all to them to not have a larger snap shot of a person's credit history.

Message 126 of 149
Creditfan1234
Contributor

Re: Millennials and credit card use

Very interesting topic happening here! It's great though, I am 25 and have had a credit card since the day I turned 18. I was highly discouraged by my parents in getting one but did it anyway. Capital One let me in with a $500 limit and that card made my life a lot easier when it came time to buy a car, rent an apartment, get other cards and now I have been a homeowner for over a year. When I was a poor college student I even bought a MacBook Pro with the apple rewards card and was told by my mom not too do it but I did it and paid the computer off in 6 months due to being diligente. I feel that the younger crowd struggles to gather that nest egg they need and so the idea of a credit card turns into a form of debt for them quickly or they have seen their friends go upside with them. I work in the financial industry and have repeadily told parents of 18+ young adults that they need to start small with a CC as soon as possible. Even if they put it in the sock drawer for a while. It'll be more beneficial then anything at this stage. The looks I get sometimes are sad because they think I am betraying everything they have taught their kids about saving. Ha. I agree with what others have said, there should be a more informational financial education class for seniors in high school for students and parents too attend to help set them up for success.
Message 127 of 149
Anonymous
Not applicable

Re: Millennials and credit card use

Even though I think I was more credit/financial literate compared to my peers I would have loved a class like that.

 

Also you now have a major imbalance with millenials - they are constantly fed images of excess and overspending.  It is just way cool to spend on a vacation, new shoes, etc.  Many of whom these people might be living paycheck to paycheck and funding their lifestyles all on credit cards just to front.

 

The class might reinforce a peer mentality of it being cool to save more, build that nest egg, don't let the banks get so much of your hard earned money (interest), and retire early / comfortable.  Even helping these high school kids give a hard thought towards balance their student debt with their future earning potential in their field of choice could help stem all these people with $200K in debt and a liberal arts degree.

Message 128 of 149
Kidcat
Established Contributor

Re: Millennials and credit card use

I have two kids in college...and I will say one reason millennials may not have credit or get a credit card later is the LACK of credit card companies on college campuses.

 

When I went to college in '84 every big bank had booths on campus during orientation week.  You did not have to have income and you could get a credit card.  Of course they always gave a gift for applying which was usually something useful. And they were aggressive in getting you to apply.  We didn't have the internet and the credit card companies did not have to disclose as much as they do now.  How many people in my age group got into trouble early with credit card debt?  I knew folks filing for BK while still in college.

 

So the introduction to credit cards at that time was unavoidable if you went to college.  Whereas now it's pretty much non existent.

 

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!

 

My point is since there is no overt, active or aggressive courting of college students like there was in the '80's credit cards don't have the same allure.  They'll get there, but maybe at a later age.




Last app 09/21/2021. Gardening Goal Oct 2023
Message 129 of 149
Kidcat
Established Contributor

Re: Millennials and credit card use

I'm just trying to figure out why so many equate having a credit card with financial literacy.  Unless you are really specifically looking for different credit cards most people will just go with the card offered by their bank.

 

My colleagues are for the most part very very financially liteate.  Almost to a person they use one cc (usually  Amex Plat) or debit.  I'm the only one with more than 2-3 cards and they all think I'm crazy...I would say we are all at least educated (lawyers).

 

None of them research cards or are into figuring out the minutae of rewards between 1 card and the next.  They have "better things to do".  Some have enough savings to retire in their late 40's early 50's, and others are putting kids through college etc.

 

I don't equate financial literacy and knowing how to maximize rewards.  How many young people on this site get a bunch of cards, get in over their heads, and then need a plan to pay off.

 

If someone is young and travels rarely why do they need a card with a $450 annual fee.  If someone is spending $200 $300 max on a CC, they get back $2-$5 here or there.  For some the spend does not justify the credit card, especially if there is a fee.

 

Usually when you see millenials that aren't into credit cards, if they have a card it's DC, Freedom, or Discover...primarily because they are no annual fee and advertise a lot...though mine don't even watch TV other than C-Span or public TV.




Last app 09/21/2021. Gardening Goal Oct 2023
Message 130 of 149
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