Millennials and Credit Cards: Yes or No? Or both?

A recent New York Times piece has made some financial news, declaring that  “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, when the Fed began collecting data in a standardized way.”

“Their reluctance could have lasting repercussions,” according to the analysis, “as well as for the financial system and the economy. Early use of credit cards has, in the past, helped young Americans develop a comfort level with credit that can last a lifetime and lead to a succession of big purchases financed by debt. Without a substantial credit history, it is much harder to take out a home  mortgage, for example.”

According to one consumer finance specialist quoted in the article, this may mean millennials will take longer to “access credit — in the meantime, their behavior and some of their habits will have already been formed.”

The Pymnts.com website had their own “analysis of the analysis,” and opined that “growing up in the immediate aftermath of the financial meltdown had definite and calculable effects on how Millennials use money and credit products as they grow into adulthood.

“Only 37 percent of American households headed by someone 35 and under held credit card debt as of 2013 (the most recent year data is available for) according to the Federal Reserve’s Survey of Consumer Finances… Over the 24 years the Fed has been measuring it, that represents the lowest level of debt for under-35 consumers since data collection began in 1989. It is also an approximately 25 percent decline from pre-financial crisis levels for the same age cohort.”

Bankrate’s website cites one presumably typical member of that demographic who “is perfectly content with her debit card, a payment method whose existence has eaten into the credit card’s market share.

“Debit ‘eliminates that convenience advantage’ credit cards previously enjoyed, says Eric Lindeen, director of marketing at Zoot Enterprises, since traditional or prepaid debit cards are just as easy to use for making purchases or paying bills online.”

What might that mean for the idea of payments in general? Well, issues of “credit” aside, millennials still obviously like the convenience of using cards– and increasingly, mobile and other “non-cash” payment forms as well.

Make sure you’re offering as many convenient ways for your customers to pay you as possible — whether mobile, easy online checkout, or making sure their “traditional” cards purchases are as secure as can be, something even more critical when customers use debit cards connected directly to their accounts.

And we, meanwhile, will see you “next post” — when the world, and all its millennials, will be a week older.

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