The intersection of the Great Recession, Financial Crisis of 2008 and the rise of technology is producing a number of interesting new developments. The ways we work and play are changing, and the way we interact with money is changing as well.
Millennials, for instance, are taking the lessons learned from recent financial difficulties and using new financial tools to approach money differently from their parents. The latest money trends are evident in the way that credit cards seem to be falling out of favor with millennials.
Saying “No” to Credit Cards
According to a recent survey from Bankrate, about 63% of millennials don’t even have a credit card. For reference, only 35% of those 30 and older are credit cards free.
It’s not hard to see why. Following the recent financial crisis, there was an upsurge in savings, and ideas of only buying what you have the money for. Additionally, the upcoming generation seems more interested in experiences than in acquiring more stuff. Not only that, but many millennials aredealing with the highest student loan debt load ever. Simply put, they aren’t interested in wracking up more debt using credit cards.
According to the Bankrate article, many millennials are happy to use debit cards instead of credit cards because they offer convenience, without the risk of getting into debt and the cost of interest.
But are Some Millennials Turning to Other Forms of Credit?
Just because millennials aren’t interested in credit cards, though, doesn’t mean they’re completely eschewing credit, says PayPal. According to PayPal’s research, millennials might be interested in more innovative ways of paying — and that might even include using credit.
PayPal says that millennials now make up 33% of PayPal Credit shoppers, and that many millennials are interested in being able to use online payment tools to make purchases, especially if it means they can avoid entering credit card information each time they buy something.
Rather than getting rid of credit altogether, some millennials might just be shifting to different payment methods, including the ability to use their smart phones to make purchases. I know I’ve made use of Apple Pay when I’ve forgotten my wallet — and been glad that the establishment was set up to complete my purchase even though I didn’t have any cash or a physical credit card available. I also use PayPal a lot for online purchases. These newer methods of payment are fast and easy, and could eventually replace how most people pay today.
Credit reporting is also a big subject of interest to many millennials. Since so many of them are wary of debt, they are trying to put pressure on the industry to place higher value on rent payments, utility payments and other non-credit payments when considering their credit history. While these items aren’t strictly related to credit, the fact of the matter is that making these payments shows responsibility and an ability to plan finances.
For millennials, financial responsibility as a whole seems more important than a credit score and an ability to manage debt payments.