Only 40% of Millennials Pay Their Credit Card Balances in Full Each Month
Millennials are the least likely of any adults to pay their credit card balances in full, and the most likely to miss a payment. Perhaps it’s a good thing the majority of them don’t have credit cards.
Consumer financial site Bankrate.com, in a new report, said that a full 63% of Millennials don’t have credit cards, as opposed to just 35% of adults over age 30.
While 53% of adults 30 and older pay their balances in full each month, only 40% of Millennials do. While just 3% of Millennials admit to often missing payments completely, this is still more than the rate for other age group.
Bankrate said that the Great Recession took its toll on credit card usage among many Americans. People shunned the cards in an effort to regain their financial standing, and to keep from getting into trouble with cards.
Perhaps Millennials – with their enormous and unprecedented levels of student loan debt – had a greater sensitivity toward falling into the “credit card trap” – and have avoided accepting credit cards in greater numbers accordingly.
Experts say that foregoing credit cards can have negative repercussions over time, since doing without the cards hinders one’s ability to build a good credit score. Even “pay as you go” types may still one day desire credit for things like buying a home, or running a small business.
So, having credit cards – but paying the balance in full each month – is a good way to build credit for the future while avoiding the trap of paying high interest on balances.
One thing we’d point out is that younger people have always had a tough time managing credit. Not only does consumer credit tempt people to buy things they can’t afford, but the very process of moving into adult life can be a topsy-turvy time of frequent moves, clunky old cars and spotty employment.
Too often, those cards are used to get through the month.
In light of these perils, it’s a good thing that more and more younger Americans are joining credit unions. CUs offer the best mix of lower rates, lower fees and sensible options for people of all ages – but particularly young adults who are struggling to make ends meet while building their lives.
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