Study: Millenials have a better handle on credit cards
Young people appear to have the right idea when it comes to credit card debt, reports Bankrate. In a report compiled by New York-based Auriemma Consulting Group, findings suggest that Millenials are approaching credit card debt with caution compared with their parents and grandparents. Only 1 in 4 claimed to carry a monthly balance.
Twenty percent fewer Millenials carry a balance
The high-water mark was 44 percent in 2007, but the 2011 survey of Millenials — born in the 1980s and 1990s — found that only 25 percent carry a monthly credit card balance, the lowest of all generations covered by the Auriemma survey. Debit card use among Millenials is much more common.
Approximately one-third of Baby Boomers reported that they roll over their credit card balance from month to month, which is down only 3 percent since 2007. Thirty-five percent of Generation Xers (between Boomers and Millenials) carry revolving credit, which is down from more than 50 percent four years ago.
Dr. Patricia Sahm of the Auriemma Consulting Group sees Millenials who have learned from the mistakes of friends and family. Debit card usage
“Many (Millenials) have been scarred by seeing friends or family struggle with unmanageable debt loads, and view credit as dangerous rather than helpful,” she said.
Millenials still want to apply
According to a separate Auriemma survey, 20 percent of consumers under age 25 said they want to open a new credit card account in 2011. Though the desire is there, provisions of the Credit Card Accountability, Responsibility and Disclosure (CARD) Act have curtailed credit card marketing to college students and young adults. As such, Sahm notes that the lack of opportunities means that Millenials tend to have fewer credit cards.
AMEX gift cards for the credit card phobic
American Express recently released a virtual eGift Card, which operates in a manner similar to a standard credit card with no fees after purchase. Funds on the card don’t expire, either. Denominations range from $25 to $200 and can be emailed to the intended recipient immediately upon purchase. Experts believe such cards will prove popular with younger consumers who wish to avoid revolving debt.