The economy is slowly bouncing back, and as it does consumers have become more concerned with their credit and not overspending. For many, the best money management comes with avoiding the use of credit cards at all. Researchers are seeing this particular strategy in an unlikely population – the Millennials.
A recent survey of 1,000 young adults by CreditCards.com, revealed that a third of Millennials are avoiding credit cards and choosing debit cards instead. Millennials site a fear of becoming trapped by spending money they don’t really have, concerns about student loan debt, and their ability to get a job in a recovering economy. About 36 percent of individuals between the ages of 18 to 29 years old state that they have never owned a credit card. Some parents believe that the reluctance to use credit cards is a positive trend for Millennials, saying that 18 is too young to carry such responsibility anyway.
While some parents are thankful that their offspring have chosen to forego credit cards, others think that avoidance of credit all together will hurt young adults when they want to make large purchases like homes or vehicles. Lenders and dealers require some sort of credit and some may out right refuse applicants that don’t have at least a few years of proven credit history.
CreditCards.com analyst, Matt Schultz, comments that the survey’s results show a major shift in the way young adults are choosing to spend money, and that the credit card industry may be changing as well. Schultz notes that in the 1990’s, credit card companies would often give out t-shirts and other products in exchange for signing up for cards, but these tactics are quickly fading away. This could be greatly due to the Credit CARD Act which requires any person under 21 to show proof of income or get a co-signer in order to receive a credit card. Regardless, Millennials are leaning more towards debit and prepaid cards.
Although waiting to use credit cards is a responsible decision, Millennials are making themselves more susceptible to fraud by only depending on debit cards, continues Schultz. If a credit card is stolen, card companies can easily wave the charges, but if debit cards are taken, then the owner’s money is taken and may not be returned for several days.
Instances of fraud and identity theft can wreck even a responsible card owner’s credit. When this happens, consumers turn to bad credit merchants to help fix their credit. eMerchantBroker.com is an expert payment processor that creates and manages bad credit merchant accounts.