Find out why so many Millennials are bypassing credit cards.
The Millennial generation, born between 1981 and 1996, has a reputation for embracing fresh concepts, experimentation and social responsibility. Many members of the generation put thought into their purchases and strive for environmental consciousness. This way of thinking also extends to finances, as a Bankrate.com survey published in September 2014 shows. According to the study of 1,161 respondents, 63 percent of millennials do not own credit cards. However, some of their reasons are more practical than anything else.
- Their large amounts of student loan debt make them reluctant to take on more burdens.
- The shaky economy also makes them wary of having credit cards.
- The Credit Card Accountability, Responsibility and Disclosure Act of 2009 tightened up credit card consumer protections and set higher standards for who could get credit cards. As a result, fewer people?including Millennials?qualify for cards.
- Debit cards, including prepaid debit cards, are an attractive alternative and make credit cards not necessary at all. Debit cards can be linked to bank accounts for direct deposits and more, and they are reloadable.
Foregoing credit cards comes with a pitfall?less of a chance for consumers to build a credit profiles. They may miss opportunities for the best loan and insurance rates.
What About Millennials Who Do Have A Credit Card?
Having no credit card is much better for a credit score compared with having a credit card and using it irresponsibly.
The survey showed that about 40 percent of Millennials who have credit cards pay their balances completely each month?worse than the 53 percent of people 30 and older who pay in full. This may be because these Millennials are using the card for purchases they can?t afford instead of using it to responsibly build credit.