8 ms·

Millennials Don’t Use Credit Cards Because They Have No Money

51 points by bonefishgrill 10y ago

mwexler 10y ago
Just to say it, it's not that millenials are just walking around with rolls of cash. Many use debit cards or other payment mechanisms (venmo, etc.). It's more the credit (unsecured lending with expected interest rate) aspect of the credit cards that they tend to shy from.
anupshinde 10y ago
A simple rule for credit cards - pay full dues every month. And get all the benefits of a credit card. Since millennials are already in debt (as the article suggests) and not having a regular income yet, credit cards will make it easier for them to buy beyond means - So it is better they delay owning credit cards. Whats wrong in that!
angersock 10y ago
> Even more notably, the benefits of improving your credit score early are immense. [citation needed] EDIT: I also particularly like the part where "financial literacy" is used as a surrogate for "people who want to overleverage themselves to make the bankers money".
- sndean 10y ago
  > [citation needed] http://www.experian.com/blogs/ask-experian/infographic-what-are-the-different-scoring-ranges/ http://www.experian.com/blogs/ask-experian/infographic-what-... At least according to them, 15% of your credit score is based on the length of your credit history. And your credit score can impact lots of things. I'd disagree with the word "immense," but it does seem somewhat useful to have a score >800 or thereabouts, and having a credit history longer than a few years is needed to have a score like that.
- the_mitsuhiko 10y ago
  Depends on the country but in the US credit rating is king. I knownpeople who moved to US who are taking a loan for a car and immediately pay it off just to build a score.
  - ch4s3 10y ago
    That's kind of a poor strategy. Open accounts, utilization, and average age of credit are the largest factors. Paying off a loan immediately may actually lower your score.
    - troebr 10y ago
      According to CreditKarma, getting "excellent" on the number of open accounts factor means having 21 or more open accounts. Assuming you have 4 cc, 2 student loans, 1 car loan and 1 mortgage you would still be in the "poor" category. I don't think I'll ever get out of the "very poor" category (0-5).
      - runevault 10y ago
        That's... insane to me. Right now I have 2 open accounts. 1 CC (that I pay off every month so no interest) and my Mortgage. I don't even have a car payment right now. Yet my credit rating is top like... 4%? Mind I've had that credit card for almost 2 decades at this point.
      - pilom 10y ago
        Shop around for credit cards more often. You can find deals where they will pay you $400 just for using their card for 3 months. A pair of southwest cards timed to get a companion pass can be worth close to $4000 if you do it right.
- ethanbond 10y ago
  Benefits of improving credit score: access to capital when shit hits the fan e.g. medical emergency? Is this disputable?
- forrestthewoods 10y ago
  Good credit helps you: rent an apartment, buy a car, lower your insurance rates, and buy a condo/house. Additionally, buying things with a credit card gives additional benefits such as extended warranties and protection against fraud.
  - angersock 10y ago
    At least two of those aren't "buy"...they are "leverage self further". I know this sounds a bit nutty, but many of the arguments for credit seem to go: "Why do I want to take on debt?" "To build your credit score!" "And what does that do for me?" "It gives you the opportunity to take on larger debts!" "And why would I want to do that?" "...why do you hate America?" Not even joking.
    - echlebek 10y ago
      I think that the credit is built by taking on debt and then paying it down. It shows that you can produce money reliably when required to do so, and that given some rope, you won't hang yourself with it. Extrapolate that a bit and you're paying a mortgage using the same skills.
- rdiddly 10y ago
  I think you're onto something though - look at this article with a skeptical eye and doesn't it begin to seem an awful lot like http://paulgraham.com/submarine.html http://paulgraham.com/submarine.html ? It's that same old shitty mix of advertising and content, with the people purchasing PR services in this case being someone in the retail credit sector. Plausible enough to wonder about it, anyway. The suit is back and Millenials just aren't big enough awesome yay special winners to use our wonderful debt product. Yeah bullshit. Stick to your guns, Millenials, and never (or at least rarely) borrow to spend.
jug5 10y ago
What a load of crap this was.
twinkletwinkle 10y ago
A lot of weird self-hating stuff specific to college students. Plenty of Millennials are late 20s with steady jobs, the author doesn't really address that at all.
- big_youth 10y ago
  We on HN are lucky to live in a world where at 24 we are fighting 6 figure jobs offers but the rest of my millennial friends do not have that experience. The median income for a 29yr old is $35k[0], which is barely enough to buy a house in B or C cities. My grandfather came from mexico, worked at a factory and was able to raise 3 kids, buy a house, rental property, and lincolns for my grandma. Can anyone say the same thing about a lower middle class worker now? [0]http://www.theatlantic.com/business/archive/2016/04/the-average-29-year-old/479139/ http://www.theatlantic.com/business/archive/2016/04/the-aver...
mc32 10y ago
...that's better than previous generations who didn't have the money but overextended themselves anyway. On the other hand... This could mean they would overextend themselves financially if they had the confidence in the economy to take the risk and they simply don't have confidence in the future economic climate.
jacinabox 10y ago
It's indicative of the paradoxical nature of the times, that taking on loads of debt is kind of a dumb personal decision, but the health of the economy depends on people doing it.
- qsymmachus 10y ago
  https://en.wikipedia.org/wiki/Immiseration_thesis https://en.wikipedia.org/wiki/Immiseration_thesis
wilg 10y ago
Does "hold credit card debt" include people who pay their credit card off each month? If not, it seems like the premise of the article is wrong.
apendleton 10y ago
> the average American under 35 had 182 percent less student debt What does that mean? If you have a 100% less of something than someone else, you don't have any of it, right? Did colleges owe the average student money in 1995?
- econner 10y ago
  Hah. This is why I hate all comparisons in percentages. You can't have 110% of something. Or the old "give it 110%"... no I can only give 100%. Nothing more.
  - Nacraile 10y ago
    The error you're pointing out does not exist in general. % just means "per hundred". If I say A is 110% of B, I'm just saying there are 110 A for every 100 B, which is perfectly reasonable in many contexts. Of course it doesn't make sense to say "Give 110 for every 100 you have available", but that's just one particular context. On the other hand, "Give 110 for every 100 you think you have available" makes perfect sense, if you interpret it to imply that people generally underestimate their ability / hold back.
- SilasX 10y ago
  Probably the rookie error where someone sees X = 3Y and says, "X is 200% more than Y, therefore Y is 200% less than X". (It's an accurate enough approximation at small levels, like when X is 1% more than Y, but becomes misleading around 10% and downright funny over 100%.)
MrFoof 10y ago
I realize I'm likely an outlier (as a millenial) in my age cohort but... the whole reason I have no credit card debt is because I'd prefer to not pay interest when I don't have to. I certainly use my credit cards. In fact, I use them for everything I can, to maximize my rewards (which equates to ~$75 in cash back every month). The only things I can't use them for is rent and health insurance. Everything else gets churned through, and the balance is paid off at the end of every statement. It's quicker, has better fraud protection, and is easier to ensure I'm staying on budget. I just haven't paid a cent in interest in at least a decade. I believe the term the credit card companies have for me is a "deadbeat".
- teej 10y ago
  The credit card companies still get paid on transaction fees, which is where your rewards come from. They collect $150 from the merchant and pass $75 on to you. They are arguably making just as much money on you as someone with low transaction volume (say $250/mo) but with a $3k-$5k balance @ 20% APR which is $50 to $80 in interest a month.
- bluGill 10y ago
  > I believe the term the credit card companies have for me is a "deadbeat". No, the credit cards are making plenty of money off of you: probably on the order of $150 a month. From there it costs $.35 to bulk mail your bill, and $.25 to process your payment (including the cost of running the web site you pay it at). There is also your share of the advertising they do, and other overhead that I don't know how to place. Still their profit off of you is over $100/month! I'm not entirely convinced that the person who maxes out their cards and pays interest is actually more profitable - a lot of them will end up defaulting in a few years and paying less than they actually put on the cards in interest. I can't be bothered to look up the numbers (if they are even available) to see if that is true or not. Of course I made up the numbers above. They are ballpark (and somewhat variable), but they give you a picture of the truth: your are insanely profitable to them.
  - MrFoof 10y ago
    Having worked in payment systems and processing, I'm well aware of the interchange fees and other fees. However, the specific name for the cohort of users who paid a very small percentage of their spend (including 0%) was indeed "deadbeat" (at least in the two data warehouses I helped build out), as I'm less profitable than others with less spend. In fact, one issuer (Capital One) actually closed a card I regularly used (~$1000/year annual spend) about 2 years ago, the letter not stating reasons why. I actually called customer service, and they cited that the costs to maintain my account was considered too high. I used them for a specific category of transactions in which the rewards were higher than any other card I had. Though my usage was apparently insufficient to make it worthwhile keeping me as a customer.
rhodysurf 10y ago
I use my credit cards for everything but I pay them off in full and have never paid interest on them.
- k__ 10y ago
  I only use debit cards, because I can get withdraw money on any ATM with it without additional costs.
  - kazinator 10y ago
    "Debit card" is just a fancy word for "bank client card". No "ding" for withdrawals on any ATM on any ATM network, really? And no monthly service charge for the account? No limit on how many withdrawals or debit payments per month?
    - k__ 10y ago
      It's a visa card, but without credit.
sparky_ 10y ago
Millennial here. Opened my first credit card, a Discover student card, at 18 whilst in college. My credit limit was something awful, $1000 if I recall correctly. But the credit impact was immense. By charging a hundred bucks or two, and never carrying a balance, I already had a 4 year long positive credit history upon graduation. Fast forward a few years, and I was able to take out a mortgage at 25. The Credit Union that granted it explicitly stated that said length of responsible credit card membership was the deciding factor. It doesn't take much to build a credit history while you're young, and even $50 or $100 per month in your student years is enough to get a serious leg up.
- jff 10y ago
  Yep, same. I got a Discover card when I went off to my first internship at 19. I kept that card, and only that card, until I was about 27, when I finally added a Visa for Southwest points. Paying off every single bill on-time and in full (except for one month when I'd just moved cross-country and hadn't got my first paycheck yet) meant that I received nothing but benefits from the credit card, and ended up with a credit score over 800 when I finally decided to buy a house this year. As a student, the Discover card was great because there were no yearly fees (what student wants to spend $100/year on that?) and it gave 1% cash-back, which was a nice little bonus a couple times a year that I could apply directly to the current bill. I know quite a few people who refuse to get a credit card, because they apparently think they'll just be unable to control themselves and rack up $10,000 in debt the first month. I guess the voices in their heads tell them to spend. They tend to be a little surprised when they try to get a home loan and realize that, sans credit history, they have no chance.
- Nacraile 10y ago
  Interestingly, you can get the benefits to your credit rating without actually using the card at all (beyond the couple transactions per year required to keep the account active). In fact, this is an optimal strategy: One of the factors in your credit rating is how much of your available credit you use. Bizarrely, even if you pay your balance in full every month, a large balance:limit ratio still counts against you. So spending no money is better than having enough income to spend lots of money without holding debt long term. If you want to put all your spending through the card for the side-effects without being penalized for using too much money responsibly, you have to pay down your balance before the billing date. Basically: credit ratings are crazy bullshit.
steve19 10y ago
Its probably because they can use alternatives like Debit Cards and PayPal. Also I am not sure if lower credit card debt means people don't have credit cards, or if they are just using them for transactions rather than accumulating debt.
ihaveahadron 10y ago
I t doesn't seem unrealistic to think that the generation before mine was probably greediest, and stupidest generation of the history of the world. I say we round them all up and literally throw them into a pit of snakes. Literally, not figuratively.
ng-user 10y ago
Millennial checking in: I don't have a credit card, just got rid of overdraft on my regular bank account and have a line of credit. Once I pay off the LOC I'm never using credit again unless it's an invest that will pay itself off, ie. a (successful) business, real-estate, etc.
- libraryatnight 10y ago
  I'm of a similar mind. I sort of resented the tone (that might have been perceived) in the article that not using a credit card is some kind of marker of a financial dummy or irrational paranoid. I pay cash for everything. I have a stable checking account, savings account, and several investment accounts that has my money working for me and growing. I'm completely aware of what the credit cards offer and I don't think it's valuable to me or my goals. The only credit I want in my future is potentially a home and if I can make that happen in cash, I will, or at the very least a down payment that keeps the credit line realistic to pay off before I'm senile.
binalpatel 10y ago
I'm probably an odd one out, but I love using credit cards. Got my first student card as a freshmen in college, and at this point I have about 10 cards, each with a very high limit (most of them with nothing on them). I treat them like shock absorbers/cheap debt. For example - we're saving up for a down payment, while there's large bulk expenses that pop up like tuition for Masters programs. I throw those on the credit cards, and take advantage of balance transfer offers to essentially get a low-interest loan for a year.
- antisthenes 10y ago
  Are there 2-3% balance transfer cards?
  - binalpatel 10y ago
    Initial fee of 2-3% of the balance to transfer, then 0% APR for a 1 to 1.5 years normally.
bogomipz 10y ago
There's a difference between not using a credit cards and not carrying credit card debt. Its called paying your balance off every month. A bit of clickbait there in the title.
jordanlev 10y ago
I don't understand why the author titled this piece "...because they have no money", when the article doesn't actually give that as a reason (instead it's 'lack of awareness [of benefits]', 'not being financially literate', and 'being more self-aware').
stryan 10y ago
Anecdotally speaking, I'd have to disagree with the authors conclusion here. Most of my college-aged friends (many of which are from the University of Delaware, the same school the author goes to) rely solely on their credit cards; the only ones I can think of who don't are those who get paid mostly in cash (waiters/waitresses, bartenders, under-the-table short term jobs, etc). Hell, most of my friends think I'm weird for using cash as much as possible; few even carry cash these days. Personally, I'd say that, while plenty of college-age millennials still rack of credit card debt, a lot of us also had the idea of "Always pay off the entire monthly amount on your card" beaten into us by our parents and by seeing the effects of the recession. We might not be "financially literate" yet (god knows I'm still learning) but we at least know that.
atombath 10y ago
Wish I could take my page view(s) back. A poorly written article that summarizes another mediocre article which could be summed up very easily: Millennials aren't using credit card debt as much as previous generations because they're more familiar with the effect of debt than any other generation before them.
ggregoire 10y ago
Fun fact: In France we don't use credit cards, only debit cards... but everybody says "credit cards" to talk about the debit cards. Actually most people don't know that there is a difference (I was one of them before visiting a foreign country).
jogjayr 10y ago
> Data from the Federal Reserve indicates that the percentage of Americans under 35 who hold credit card debt has fallen to its lowest level since 1989. I read the original NYT article and had the same questions as many people here. 1. Isn't having less debt a good thing overall? (I'm not talking about things like business loans and so on) 2. Does lower credit card debt in the 20-35 cohort imply lower usage of credit cards or is just due to them running a balance less often? Is it still counted as "debt" if the balance is paid off every month? 3. Has anyone surveyed credit card companies about increase or decrease in number of credit card application approvals from the 20-35 cohort? Could that be a better proxy of credit card usage? 4. Is it at all possible that millenials use credit cards more sensibly than other generations? Maybe they only spend as much as they can pay off every month. After all, this is the generation that grew up in two wars and a depression.

51 points by bonefishgrill 10y ago

Just to say it, it's not that millenials are just walking around with rolls of cash. Many use debit cards or other payment mechanisms (venmo, etc.). It's more the credit (unsecured lending with expected interest rate) aspect of the credit cards that they tend to shy from.

anupshinde 10y ago

A simple rule for credit cards - pay full dues every month. And get all the benefits of a credit card. Since millennials are already in debt (as the article suggests) and not having a regular income yet, credit cards will make it easier for them to buy beyond means - So it is better they delay owning credit cards. Whats wrong in that!

angersock 10y ago

> Even more notably, the benefits of improving your credit score early are immense. [citation needed] EDIT: I also particularly like the part where "financial literacy" is used as a surrogate for "people who want to overleverage themselves to make the bankers money".

sndean 10y ago
> [citation needed] http://www.experian.com/blogs/ask-experian/infographic-what-are-the-different-scoring-ranges/ http://www.experian.com/blogs/ask-experian/infographic-what-... At least according to them, 15% of your credit score is based on the length of your credit history. And your credit score can impact lots of things. I'd disagree with the word "immense," but it does seem somewhat useful to have a score >800 or thereabouts, and having a credit history longer than a few years is needed to have a score like that.
the_mitsuhiko 10y ago
Depends on the country but in the US credit rating is king. I knownpeople who moved to US who are taking a loan for a car and immediately pay it off just to build a score.
- ch4s3 10y ago
  That's kind of a poor strategy. Open accounts, utilization, and average age of credit are the largest factors. Paying off a loan immediately may actually lower your score.
  - troebr 10y ago
    According to CreditKarma, getting "excellent" on the number of open accounts factor means having 21 or more open accounts. Assuming you have 4 cc, 2 student loans, 1 car loan and 1 mortgage you would still be in the "poor" category. I don't think I'll ever get out of the "very poor" category (0-5).
    - runevault 10y ago
      That's... insane to me. Right now I have 2 open accounts. 1 CC (that I pay off every month so no interest) and my Mortgage. I don't even have a car payment right now. Yet my credit rating is top like... 4%? Mind I've had that credit card for almost 2 decades at this point.
    - pilom 10y ago
      Shop around for credit cards more often. You can find deals where they will pay you $400 just for using their card for 3 months. A pair of southwest cards timed to get a companion pass can be worth close to $4000 if you do it right.
ethanbond 10y ago
Benefits of improving credit score: access to capital when shit hits the fan e.g. medical emergency? Is this disputable?
forrestthewoods 10y ago
Good credit helps you: rent an apartment, buy a car, lower your insurance rates, and buy a condo/house. Additionally, buying things with a credit card gives additional benefits such as extended warranties and protection against fraud.
- angersock 10y ago
  At least two of those aren't "buy"...they are "leverage self further". I know this sounds a bit nutty, but many of the arguments for credit seem to go: "Why do I want to take on debt?" "To build your credit score!" "And what does that do for me?" "It gives you the opportunity to take on larger debts!" "And why would I want to do that?" "...why do you hate America?" Not even joking.
  - echlebek 10y ago
    I think that the credit is built by taking on debt and then paying it down. It shows that you can produce money reliably when required to do so, and that given some rope, you won't hang yourself with it. Extrapolate that a bit and you're paying a mortgage using the same skills.
rdiddly 10y ago
I think you're onto something though - look at this article with a skeptical eye and doesn't it begin to seem an awful lot like http://paulgraham.com/submarine.html http://paulgraham.com/submarine.html ? It's that same old shitty mix of advertising and content, with the people purchasing PR services in this case being someone in the retail credit sector. Plausible enough to wonder about it, anyway. The suit is back and Millenials just aren't big enough awesome yay special winners to use our wonderful debt product. Yeah bullshit. Stick to your guns, Millenials, and never (or at least rarely) borrow to spend.

jug5 10y ago

What a load of crap this was.

twinkletwinkle 10y ago

A lot of weird self-hating stuff specific to college students. Plenty of Millennials are late 20s with steady jobs, the author doesn't really address that at all.

big_youth 10y ago
We on HN are lucky to live in a world where at 24 we are fighting 6 figure jobs offers but the rest of my millennial friends do not have that experience. The median income for a 29yr old is $35k[0], which is barely enough to buy a house in B or C cities. My grandfather came from mexico, worked at a factory and was able to raise 3 kids, buy a house, rental property, and lincolns for my grandma. Can anyone say the same thing about a lower middle class worker now? [0]http://www.theatlantic.com/business/archive/2016/04/the-average-29-year-old/479139/ http://www.theatlantic.com/business/archive/2016/04/the-aver...

mc32 10y ago

...that's better than previous generations who didn't have the money but overextended themselves anyway. On the other hand... This could mean they would overextend themselves financially if they had the confidence in the economy to take the risk and they simply don't have confidence in the future economic climate.

jacinabox 10y ago

It's indicative of the paradoxical nature of the times, that taking on loads of debt is kind of a dumb personal decision, but the health of the economy depends on people doing it.

qsymmachus 10y ago
https://en.wikipedia.org/wiki/Immiseration_thesis https://en.wikipedia.org/wiki/Immiseration_thesis

wilg 10y ago

Does "hold credit card debt" include people who pay their credit card off each month? If not, it seems like the premise of the article is wrong.

apendleton 10y ago

> the average American under 35 had 182 percent less student debt What does that mean? If you have a 100% less of something than someone else, you don't have any of it, right? Did colleges owe the average student money in 1995?

econner 10y ago
Hah. This is why I hate all comparisons in percentages. You can't have 110% of something. Or the old "give it 110%"... no I can only give 100%. Nothing more.
- Nacraile 10y ago
  The error you're pointing out does not exist in general. % just means "per hundred". If I say A is 110% of B, I'm just saying there are 110 A for every 100 B, which is perfectly reasonable in many contexts. Of course it doesn't make sense to say "Give 110 for every 100 you have available", but that's just one particular context. On the other hand, "Give 110 for every 100 you think you have available" makes perfect sense, if you interpret it to imply that people generally underestimate their ability / hold back.
SilasX 10y ago
Probably the rookie error where someone sees X = 3Y and says, "X is 200% more than Y, therefore Y is 200% less than X". (It's an accurate enough approximation at small levels, like when X is 1% more than Y, but becomes misleading around 10% and downright funny over 100%.)

MrFoof 10y ago

I realize I'm likely an outlier (as a millenial) in my age cohort but... the whole reason I have no credit card debt is because I'd prefer to not pay interest when I don't have to. I certainly use my credit cards. In fact, I use them for everything I can, to maximize my rewards (which equates to ~$75 in cash back every month). The only things I can't use them for is rent and health insurance. Everything else gets churned through, and the balance is paid off at the end of every statement. It's quicker, has better fraud protection, and is easier to ensure I'm staying on budget. I just haven't paid a cent in interest in at least a decade. I believe the term the credit card companies have for me is a "deadbeat".

teej 10y ago
The credit card companies still get paid on transaction fees, which is where your rewards come from. They collect $150 from the merchant and pass $75 on to you. They are arguably making just as much money on you as someone with low transaction volume (say $250/mo) but with a $3k-$5k balance @ 20% APR which is $50 to $80 in interest a month.
bluGill 10y ago
> I believe the term the credit card companies have for me is a "deadbeat". No, the credit cards are making plenty of money off of you: probably on the order of $150 a month. From there it costs $.35 to bulk mail your bill, and $.25 to process your payment (including the cost of running the web site you pay it at). There is also your share of the advertising they do, and other overhead that I don't know how to place. Still their profit off of you is over $100/month! I'm not entirely convinced that the person who maxes out their cards and pays interest is actually more profitable - a lot of them will end up defaulting in a few years and paying less than they actually put on the cards in interest. I can't be bothered to look up the numbers (if they are even available) to see if that is true or not. Of course I made up the numbers above. They are ballpark (and somewhat variable), but they give you a picture of the truth: your are insanely profitable to them.
- MrFoof 10y ago
  Having worked in payment systems and processing, I'm well aware of the interchange fees and other fees. However, the specific name for the cohort of users who paid a very small percentage of their spend (including 0%) was indeed "deadbeat" (at least in the two data warehouses I helped build out), as I'm less profitable than others with less spend. In fact, one issuer (Capital One) actually closed a card I regularly used (~$1000/year annual spend) about 2 years ago, the letter not stating reasons why. I actually called customer service, and they cited that the costs to maintain my account was considered too high. I used them for a specific category of transactions in which the rewards were higher than any other card I had. Though my usage was apparently insufficient to make it worthwhile keeping me as a customer.

rhodysurf 10y ago

I use my credit cards for everything but I pay them off in full and have never paid interest on them.

k__ 10y ago
I only use debit cards, because I can get withdraw money on any ATM with it without additional costs.
- kazinator 10y ago
  "Debit card" is just a fancy word for "bank client card". No "ding" for withdrawals on any ATM on any ATM network, really? And no monthly service charge for the account? No limit on how many withdrawals or debit payments per month?
  - k__ 10y ago
    It's a visa card, but without credit.

sparky_ 10y ago

Millennial here. Opened my first credit card, a Discover student card, at 18 whilst in college. My credit limit was something awful, $1000 if I recall correctly. But the credit impact was immense. By charging a hundred bucks or two, and never carrying a balance, I already had a 4 year long positive credit history upon graduation. Fast forward a few years, and I was able to take out a mortgage at 25. The Credit Union that granted it explicitly stated that said length of responsible credit card membership was the deciding factor. It doesn't take much to build a credit history while you're young, and even $50 or $100 per month in your student years is enough to get a serious leg up.

jff 10y ago
Yep, same. I got a Discover card when I went off to my first internship at 19. I kept that card, and only that card, until I was about 27, when I finally added a Visa for Southwest points. Paying off every single bill on-time and in full (except for one month when I'd just moved cross-country and hadn't got my first paycheck yet) meant that I received nothing but benefits from the credit card, and ended up with a credit score over 800 when I finally decided to buy a house this year. As a student, the Discover card was great because there were no yearly fees (what student wants to spend $100/year on that?) and it gave 1% cash-back, which was a nice little bonus a couple times a year that I could apply directly to the current bill. I know quite a few people who refuse to get a credit card, because they apparently think they'll just be unable to control themselves and rack up $10,000 in debt the first month. I guess the voices in their heads tell them to spend. They tend to be a little surprised when they try to get a home loan and realize that, sans credit history, they have no chance.
Nacraile 10y ago
Interestingly, you can get the benefits to your credit rating without actually using the card at all (beyond the couple transactions per year required to keep the account active). In fact, this is an optimal strategy: One of the factors in your credit rating is how much of your available credit you use. Bizarrely, even if you pay your balance in full every month, a large balance:limit ratio still counts against you. So spending no money is better than having enough income to spend lots of money without holding debt long term. If you want to put all your spending through the card for the side-effects without being penalized for using too much money responsibly, you have to pay down your balance before the billing date. Basically: credit ratings are crazy bullshit.

steve19 10y ago

Its probably because they can use alternatives like Debit Cards and PayPal. Also I am not sure if lower credit card debt means people don't have credit cards, or if they are just using them for transactions rather than accumulating debt.

ihaveahadron 10y ago

I t doesn't seem unrealistic to think that the generation before mine was probably greediest, and stupidest generation of the history of the world. I say we round them all up and literally throw them into a pit of snakes. Literally, not figuratively.

ng-user 10y ago

Millennial checking in: I don't have a credit card, just got rid of overdraft on my regular bank account and have a line of credit. Once I pay off the LOC I'm never using credit again unless it's an invest that will pay itself off, ie. a (successful) business, real-estate, etc.

libraryatnight 10y ago
I'm of a similar mind. I sort of resented the tone (that might have been perceived) in the article that not using a credit card is some kind of marker of a financial dummy or irrational paranoid. I pay cash for everything. I have a stable checking account, savings account, and several investment accounts that has my money working for me and growing. I'm completely aware of what the credit cards offer and I don't think it's valuable to me or my goals. The only credit I want in my future is potentially a home and if I can make that happen in cash, I will, or at the very least a down payment that keeps the credit line realistic to pay off before I'm senile.

binalpatel 10y ago

I'm probably an odd one out, but I love using credit cards. Got my first student card as a freshmen in college, and at this point I have about 10 cards, each with a very high limit (most of them with nothing on them). I treat them like shock absorbers/cheap debt. For example - we're saving up for a down payment, while there's large bulk expenses that pop up like tuition for Masters programs. I throw those on the credit cards, and take advantage of balance transfer offers to essentially get a low-interest loan for a year.

antisthenes 10y ago
Are there 2-3% balance transfer cards?
- binalpatel 10y ago
  Initial fee of 2-3% of the balance to transfer, then 0% APR for a 1 to 1.5 years normally.

bogomipz 10y ago

There's a difference between not using a credit cards and not carrying credit card debt. Its called paying your balance off every month. A bit of clickbait there in the title.

jordanlev 10y ago

I don't understand why the author titled this piece "...because they have no money", when the article doesn't actually give that as a reason (instead it's 'lack of awareness [of benefits]', 'not being financially literate', and 'being more self-aware').

stryan 10y ago

Anecdotally speaking, I'd have to disagree with the authors conclusion here. Most of my college-aged friends (many of which are from the University of Delaware, the same school the author goes to) rely solely on their credit cards; the only ones I can think of who don't are those who get paid mostly in cash (waiters/waitresses, bartenders, under-the-table short term jobs, etc). Hell, most of my friends think I'm weird for using cash as much as possible; few even carry cash these days. Personally, I'd say that, while plenty of college-age millennials still rack of credit card debt, a lot of us also had the idea of "Always pay off the entire monthly amount on your card" beaten into us by our parents and by seeing the effects of the recession. We might not be "financially literate" yet (god knows I'm still learning) but we at least know that.

atombath 10y ago

Wish I could take my page view(s) back. A poorly written article that summarizes another mediocre article which could be summed up very easily: Millennials aren't using credit card debt as much as previous generations because they're more familiar with the effect of debt than any other generation before them.

ggregoire 10y ago

Fun fact: In France we don't use credit cards, only debit cards... but everybody says "credit cards" to talk about the debit cards. Actually most people don't know that there is a difference (I was one of them before visiting a foreign country).

jogjayr 10y ago

> Data from the Federal Reserve indicates that the percentage of Americans under 35 who hold credit card debt has fallen to its lowest level since 1989. I read the original NYT article and had the same questions as many people here. 1. Isn't having less debt a good thing overall? (I'm not talking about things like business loans and so on) 2. Does lower credit card debt in the 20-35 cohort imply lower usage of credit cards or is just due to them running a balance less often? Is it still counted as "debt" if the balance is paid off every month? 3. Has anyone surveyed credit card companies about increase or decrease in number of credit card application approvals from the 20-35 cohort? Could that be a better proxy of credit card usage? 4. Is it at all possible that millenials use credit cards more sensibly than other generations? Maybe they only spend as much as they can pay off every month. After all, this is the generation that grew up in two wars and a depression.