For context: I am a 21yr old male living in California. I own a business and make money any way I can. If someone needs something, I can get it done, ASAP.
With that in mind my opinions on Credit are from a third party perspective. And have everything to do with how I see my group of friends from high school utilize credit in their daily lives. With this small sample size, and extrapolation, I have come to a few conclusions about consumer credit that are both shocking - and perhaps - all to familiar with our my MyFico friends.
Credit Cards are amazing tools, their use has so many facets. Establishing, growing, borrowing, banking relationship starting, and more.
What strikes me as the biggest problem amongst my generation is a lack of education, or willingness to learn: simply signing up for the flashiest ad. Or even the lowest Annual Fee, not taking into account a 29.99% Interest rate.
My high School and early college experience was devoid of proper financial education. And it shows. Many of my friends have Credit Cards, but utilize 100% of their 1k limit every month. Pay at the end of the cycle - or the minimum payment - and wonder why their credit doesn't go up.
Credit Card use amongst my generation has two causes. Misunderstanding and misinformation, these two things together make for unreliable consumers. Whom default on their obligations (making our economy... and our banks weaker) or seek a minimum payment lifestyle for many years until desperation causes education.
It may seem easy to us - who frequent the boards - and make light of our amazing credit limits. But in my friend group, I'm the only one with high limits, and a 2% untilization rate. And ability to pay off isn't the only factor.
I'll link an article which looks at another side of this. But perhaps these are two sides on the same coin. I'd love to hear any of your experiences.
Charging into Adulthood:
Lack of education has gone back past my generation. Pretty sure the issue is millenials don't trust banks. They don't trust most authority at all. Couple that with being about that gram life and you get the current situation.
@Brian_Earl_Spilner wrote:Lack of education has gone back past my generation. Pretty sure the issue is millenials don't trust banks. They don't trust most authority at all. Couple that with being about that gram life and you get the current situation.
It's silly IMO not to trust banks. They are a business, they make money off of your deposits. So what? If you choose the right bank their service and products will help you advance.
It seems like fear can be linked to education as well. And the banks aren't doing a good job eliminating these fears. It's hard to argue that a bank is bad when my friend with a Wells Fargo Acct. accidentally buys a soda over his checking account limit and it charges him 70.00 overdraft.
Why do you think they find banks untrustworthy?
The consensus is they grew up in a recession and they saw how the banks treated their parents. Things like the housing bubble, etc.
@Brian_Earl_Spilner wrote:The consensus is they grew up in a recession and they saw how the banks treated their parents. Things like the housing bubble, etc.
Interesting...
Gen Z here, I feel like I can trust banks to be consistent in that they are making a profit off of me, which means that their priority is not me but their money. My Mom had an account with US Bank many years ago that she closed. I can't remember the specifics, but they charged her some fee that they shouldn't have, so that account had a negative balance. However, they didn't apply this fee until after she had closed it, so she didn't even know they were charging it. US Bank left this fee on her account and it multiplied after some 8 years becoming a massive amount. Luckily, a class action lawsuit removed this charge from her account and she got some 10 cents in return for the trouble. But that's hardly worth it considering it ruined her credit for when she had to buy a house as a single parent with two kids. That house was forclosed on eventually (they basically told her she had to start over i.e. forclose after financial trouble -my sister broke her arm for 1 week we were switching and did not have health insurance- put her behind 2 months on the payment) and my Mom's various experiences with these banks has led me to vowing to never do business with Well's Fargo or US Bank. I can trust them to put my well being behind their profit.
@Anonymous wrote:
@Brian_Earl_Spilner wrote:Lack of education has gone back past my generation. Pretty sure the issue is millenials don't trust banks. They don't trust most authority at all. Couple that with being about that gram life and you get the current situation.
The OP is a Generation Z not a Millenial.
We millenials do have credible reasons as to why we don't trust banks (if we choose so):
1. Two economic collapses in our lifetime before we hit 40 that we experienced (many of us millenials were in hs/college - couldn't find employment/lost employment when the reccession hit and didn't just "see/learned it" from our parents)
2. Data breaches and hackers (with little no solution to prevention/resolution)
3. Loan and mortgage discrimination (with age and race)
4. Wages that have not kept up with inflation since before we were born with the uncertainty of any benefits (and funds remaining) when we reach retirement age
There isn't a set range for generations. Being born in 1979 I fall under gen X or millenials depending on who you ask. I'm sure the same applies to Gen Z.
I've lived through 4 recessions. First, I was too young to remember. Second, I definitely felt as a kid and saw the economic fallout for my parents. Wasn't affected by the other two. So, in my case, I saw it through my parents, but I didn't develop a distrust for banks.