US – Millennials are refusing to engage with credit card companies to the alarm of financial institutions.
: Almost two thirds of Americans aged between 18 and 29 do not own a credit card, according to Bankrate
: Credit card use among the demographic has declined more rapidly than any other group, according to the Survey of Consumer Finances
: The average American under 35 has £13,080 ($17,200, €15,190) of student debt – 182% more than their peers 20 years ago, according to the Federal Reserve
The percentage of Americans under 35 who possess credit card debt has fallen to its lowest level since 1989, according to the US Federal Reserve. Fewer are taking out loans for cars and homes than their pre-financial crisis peers. Analysts suggest that Millennials’ resistance to credit has developed from witnessing the worst effects of the financial crisis on their parents: failed business, redundancy and repossession.
Rebecca Liebman, aged 23 and founder of financial literacy site LearnLux, suggests that Millennials have grown more circumspect in their attitudes to money and mistrustful of society’s pressure on them to spend rather than save – even if it’s arguably not in their best interests. ‘There are some things that are going to be specific to our generation around financial decision-making,’ she says.
Economic uncertainty, combined with higher levels of student debt and depressed wages, make credit less attractive. Instead, more Millennials are taking an off-grid attitude to finance, using mobile banking services such as Atom, Mondo and Number26 that help them monitor and diversify their spending habits.
But economists warn that Millennials’ reluctance to manage debt could hamper their chances of meeting significant life milestones and could cause the US economy to suffer. Credit cards are usually relied upon to make big payments, which help stimulate the economy, while a visible credit rating is essential for taking out a loan for a new home or to start a new business.