Millennials and Credit: Are Credit Cards Falling Out of Favor?

by Miranda Marquit · 4 comments

credit card
The intersection of the Great Recession, Financial Crisis of 2008 and the rise of technology is producing a number of interesting new developments. The ways we work and play are changing, and the way we interact with money is changing as well.

Millennials, for instance, are taking the lessons learned from recent financial difficulties and using new financial tools to approach money differently from their parents. The latest money trends are evident in the way that credit cards seem to be falling out of favor with millennials.

Saying “No” to Credit Cards

According to a recent survey from Bankrate, about 63% of millennials don’t even have a credit card. For reference, only 35% of those 30 and older are credit cards free.

It’s not hard to see why. Following the recent financial crisis, there was an upsurge in savings, and ideas of only buying what you have the money for. Additionally, the upcoming generation seems more interested in experiences than in acquiring more stuff. Not only that, but many millennials are dealing with the highest student loan debt load ever. Simply put, they aren’t interested in wracking up more debt using credit cards.

According to the Bankrate article, many millennials are happy to use debit cards instead of credit cards because they offer convenience, without the risk of getting into debt and the cost of interest.

But are Some Millennials Turning to Other Forms of Credit?

Just because millennials aren’t interested in credit cards, though, doesn’t mean they’re completely eschewing credit, says PayPal. According to PayPal’s research, millennials might be interested in more innovative ways of paying — and that might even include using credit.

PayPal says that millennials now make up 33% of PayPal Credit shoppers, and that many millennials are interested in being able to use online payment tools to make purchases, especially if it means they can avoid entering credit card information each time they buy something.

Rather than getting rid of credit altogether, some millennials might just be shifting to different payment methods, including the ability to use their smart phones to make purchases. I know I’ve made use of Apple Pay when I’ve forgotten my wallet — and been glad that the establishment was set up to complete my purchase even though I didn’t have any cash or a physical credit card available. I also use PayPal a lot for online purchases. These newer methods of payment are fast and easy, and could eventually replace how most people pay today.

Credit reporting is also a big subject of interest to many millennials. Since so many of them are wary of debt, they are trying to put pressure on the industry to place higher value on rent payments, utility payments and other non-credit payments when considering their credit history. While these items aren’t strictly related to credit, the fact of the matter is that making these payments shows responsibility and an ability to plan finances.

For millennials, financial responsibility as a whole seems more important than a credit score and an ability to manage debt payments.

What do you think? What have you seen of millennial credit trends?

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  • jose ole says:

    Older millennial here. I only have one credit card currently (although I almost never use it and definitely don’t carry it), and that was due to getting a discount on an amazon purchase with sign up. I really don’t see the need for them in my life much; if there’s something I want, I save up until I have enough to buy it with what I have. That can get derailed by things such as unexpected car repair (although a lot of that can be reduced if you feel like doing it yourself), xmas holiday gift buying, and replacing broken down appliances, but such is life. I think it would be a lot different if you add kids to the mix, or if you live in a particularly high cost of living area, but in general, I don’t really need a lot of available excess income to get by, especially when that income could come at a cost. I also don’t have the most expensive hobbies, with retro gaming being the primary one. You’ll find enough stuff to sell for a profit on ebay to pay for the ones you actually want, so much of the cost is mitigated with a bit of searching and garage sale shopping. About the only use I can see would be the credit building aspect of the card: this can be used to buy a home rather than rent, which will most likely be less or equivalent in per month cost. Plus you can always fix-up and sell the home for a possible profit or at least break-even scenario.

  • Sam says:

    I am not surprised about credit cards falling out of favor, after the last crash a lot of people got burnt and had to rethink their financial situation and I bet that included cutting up their cards with easy to spend credit. With more people shopping online, I see more virtual currencies in the future like bitcoin.

  • RICARDO says:

    Makes one think that the mills can not control their spending.
    Why should I pay cash, which is what a debit card is, and not be offered a discount by the vendor.
    I was around when credit cards made their appearance on the market and back then when you bought something the vendor would ask you “Will that be cash or credit?” My response was “Will you give me a discount for cash?”
    They were paying the cc company 3% on the sale so I figured cash was worth a 3% discount. Something like Canadian Tire money when you paid them cash you ghot 3% bach in CT money.
    At any rate, it is a sorry state if the only reason they use a debit card is because they can not control their spending.
    Plus you can get money back on some cards. But not when you pay cash (debit)


  • Money Beagle says:

    It makes sense. You often see behaviors shift from one generation to the next, and with how popular credit cards got with previous generations, it kind of makes sense that a shift would happen at some point. Millenials have it very tough with having a harder time to find jobs as well as increased student loans, so if they can offset some of that with a reduced burden from credit cards, that will definitely work to their advantage.

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