Millennials wary of credit cards but keen on potential benefits, new survey finds
09 December 2016 - 5:37AM
The $93 billion credit card market is booming, but a recent survey
commissioned by Cardratings.com and conducted online by Harris Poll
among over 2,000 US adults ages 18+ shows some American millennials
just aren't having it.
The survey results show that 29 percent of adults ages 18 -34
don't have a personal credit card. Fourteen percent of millennials
would describe their current credit score as limited/no credit
history/score, compared to only two percent of adults ages 35+ who
did the same.
Cardratings.com would like to point out the absence of a credit
card could be detrimental and increase difficulties for consumers
looking to make big purchases like a house or a car.
Having a so-called "thin" or non-existent credit history can
affect financial transactions for years to come:
- Homebuying. A thin credit file makes mortgages
harder to get and monthly payments more expensive. In April, credit
scoring company TransUnion reported that 40 percent of millennials
who want to purchase a home "may not have the credit to do
so."
- Being the boss. Financing a small business
often involves using credit, even if it's just a small business
credit card to keep expenses separate. While poor credit doesn't
automatically preclude a consumer from gaining business credit, the
U.S. Small Business Administration says those with spotty credit
will have fewer choices among lenders or face not being able to
borrow money at all.
- Savings. There is a small loss of potential
income based on foregoing the free rewards (cash back, travel
miles) that come by using cards for everyday spending and avoiding
interest charges by paying in full each month.
- Cars. Solid credit is a must in order to
finance a car at the best rates. Considering that a vehicle is the
classic "depreciating asset" (worth less after purchase) any rise
in the cost of financing matters to the bottom line.
Among millennials ages 18 – 34 that do have credit cards, 28
percent of them do not have a rewards credit card and could be
leaving money on the table.
What is it with credit cards that have millennials avoiding them
left and right?
Maria Kagianas, a 20-year-old college student from Homer Glen,
Ill., explains, "I have a debit card that is satisfying my current
needs as a college student. While living a more hectic college
lifestyle than most students my age might, keeping track of
additional credit card payments is another potential deadline to
miss. Although I would like to start building my credit, I do not
want to start hurting it either." The CardRatings survey found that
compared to older generations millennials:
- Are less likely to have a personal credit
cards. The millennial generation is less likely to have a
personal credit card when compared to the older adult population.
While 14 percent of adults ages 35+ don't have credit cards, that
number rises to 29 percent when zeroing in on those who are 18-34
years old.
- Have thinner credit profiles. Millennials are
more likely to describe their credit score as "limited/no credit
history/score" compared to their older counterparts. The survey
shows 14 percent of 18- to 34-year-olds describe their credit
profile this way, while just 2 percent of adults 35+ say the
same.
Here's what we learned about millennials and credit:
- 37 percent perceive their current credit score to be
"excellent," in comparison to 61 percent of adults ages 45+.
- 10 percent of millennials are "not at all sure" of their
current credit score.
- 75 percent of millennials who have a personal credit card carry
over a balance from month-to-month.
See the full dataset, analysis and methodology at:
http://www.cardratings.com/insights/millennials-wary-of-credit-cards-but-keen-on-potential-benefits-new-survey-finds.html.
Survey Methodology This survey was conducted
online within the United States by Harris Poll on behalf of
CardRatings from Sept. 21-23, 2016 among 2,008 U.S. adults ages 18
and older among whom 1,555 have personal credit card(s). This
online survey is not based on a probability sample and therefore no
estimate of theoretical sampling error can be calculated. For
complete survey methodology, including weighting variables, please
contact Diana Dang at mailto:ddang@quinstreet.com.
CONTACT: Diana Dang
ddang@quinstreet.com
(650) 703-6349
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