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10-16-2016 06:00 AM
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.
10-16-2016 07:34 AM
10-16-2016 07:40 AM
I think it will come around over time. DW and I are both 31. I picked up a credit card shortly after graduating college, but I was an engineer who transitioned to finance. My wife, on the other hand, didn't pick up her first credit card until about 18 months ago, when I pointed out the advantages. She's very concerned about going into debt, because her parents have debt issues and so many of our generation do. However, we both spend well below our monthly paychecks, so we don't actually accrue any debt on the cards and we need her to have a report so we can buy a home.
Generationally, I see a few issues:
1) Few of our generation were really taught financial literacy. Most were either handed everything by their parents or had to watch their parents scrap for everything. Neither is great for encouraging credit card use.
2) College costs have skyrocketed far faster than anything not named healthcare (and I don't know about that one). It now costs a lot more to get an education than it used to and, coupled with the continued push to make everybody college educated, means that people are taking on much more student loan debt than they used to. Just seeing how much you owe makes you less likely to open yourself to the possibility of more debt.
3) While the jobs market is improving, it isn't improving equally across generational lines. Many of the older generation are working well past when they were expected to retire. This means that the entry level jobs that millenials were expecting upon graduation just aren't there. No jobs makes it hard to consider getting a credit card.
4) Real estate, especially in states like California, is a mess. People have, for decades, treated a house as an investment that could only increase in value. This involved using mortgages that involved very little cash down and lots and lots of debt. Home prices going down at all is going to severly impact supply and demand in the real estate market. Why do I mention California? Because they have a law that limits increases to property taxes until you sell. Therefore, there isn't much turnover in real estate, because as soon as you move, your tax bill massively increases. All of this has an impact on credit card use, because the desire to buy a home encourages people to get credit cards and build a credit profile. Without that, you have one less reason to get a credit card.
All of these are likely to pass over time. However, it might take another 5-10 years before things might be able to right themselves. I'm also not sure if the jobs issue is ever going to get fixed. As the boomers either retire or die off, younger people will be able to enter the workforce. However, the damage done to their savings might take decades to fix, meanign that each successive generation is goign to have to work just as long as the boomers did.
10-16-2016 07:48 AM
And: heresy alert: for many people,the advantages of credit cards isn't ALL that huge. Rewards on modest spending are very modest, yes, there are better protections but the need isn't an every day occurrence. Simply not worth the bother if you aren't all that interested.
10-16-2016 07:59 AM - edited 10-16-2016 08:00 AM
As a 27-year-old I've noticed a lot of people around my age being distrusting of the system in general. I know some that waited years just to create a bank account because they didn't want to tie themself to a financial institution. I think coming to age at the peak of the financial disaster in 08 caused quite a few millenials to want as little interaction with credit as humanly possible.
10-16-2016 08:12 AM
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10-16-2016 08:35 AM
I'm 28 and I haven't used a debt card since I started rebuilding my credit 4 years ago. Honestly I think this relates a lot to the difficulty of getting credit over the years following the recession when my friends and I had essentially zero history, or worse, limited and BAD credit because we didn't understand it well enough when we were offered thousands of dollars in cards pre-recession with no job, at 18 years old. Since things have gotten a little better (and I imagine since collections are now coming off), I've noticed that my friends have started to use credit much, much more over maybe the past 1 to 2 years. Before that, you had to play the game more and put in a lot more effort to figure it all out and get what you wanted from it. Now you are likely to get something like a basic travel card offer in the mail and take another shot at the whole thing. I don't think we'll ever be as likely to just put things we want and can't afford on a card a 20-30% interest as previous generations, but I think credit card usage will go up significantly with milennials, especially if offers are more generous to get us in.
10-16-2016 08:37 AM
10-16-2016 08:45 AM
10-16-2016 09:01 AM
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