
Millennials Don’t Use Credit Cards Because They Have No Money - bonefishgrill
https://thebillfold.com/millennials-dont-use-credit-cards-because-they-have-no-money-b3b7aebfa370#.fmvfdg27r
======
MrFoof
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"_.

~~~
kardos
> I believe the term the credit card companies have for me is a "deadbeat".

Nope, they're still collecting interchange fees [1] from everyone you do
business with. They're probably taking the same amount as your rewards, if not
more.

[1]
[https://en.m.wikipedia.org/wiki/Interchange_fee](https://en.m.wikipedia.org/wiki/Interchange_fee)

~~~
pasbesoin
It's worth pointing out that as cc payments have become ubiquitous, theses
fees are built into the pricing we are all paying.

Essentially, the participation and dominance of credit card transactions in
our (U.S., at least) economy maintains a some-percent elevation in consumer
prices. That "toll" going in large part straight into payment processors' and
banks' pockets.

If you do pay by another means, perhaps the seller gets a bit more on that
particular transaction. But I've talked with many small business owners who
greatly lament these transaction fees. Not insignificantly, because they've
been unable to compete with the negotiating power of big business, the latter
as a result getting lower fees and a resulting competitive advantage.

As for "deadbeat", I've heard that term before, used for precisely the
circumstance described.

Are they "losing money"? I doubt it. But along with oligopoly comes an
oversized dose of greed. And some portion of management looking to sell their
own performance by upping the return/profit rate on extant accounts. Or
something like that, no doubt.

------
sparky_
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.

~~~
aphextron
Conversely, people like me who were stupid at 18 and let a $400 credit card go
into collections are completely screwed for a decade. I can't even get a cell
phone contract, much less a mortgage. I believe strongly that the legal age of
majority should be raised to 21.

~~~
douche
> the legal age of majority should be raised to 21

I think we just do an absolute piss-poor job of training people to be
competent adults. Delaying adulthood even further is not the answer - not when
people have historically led nations and raised children at ages that we would
now consider the same acts a felony.

~~~
aphextron
>not when people have historically led nations and raised children at ages
that we would now consider the same acts a felony

My argument has more to do with the physical development of our brains than
any social reasoning. A major reason for the 21 drinking age is that your
prefrontal cortex is simply not fully developed until well into your 20s,
leaving people to make terrible decisions without the ability to fully
comprehend them.

The age 18 majority made sense in a world where people needed to get married
and raise families and enter the workforce as soon as possible, but we no
longer live in that world (in the US at least). The better option is to extend
"childhood" a few more years, along with compulsory post secondary education
which includes proper training to be an adult.

------
apendleton
> 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
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
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.

------
mc32
...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.

------
wilg
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.

------
anupshinde
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!

------
jogjayr
> 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.

------
jacinabox
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
[https://en.wikipedia.org/wiki/Immiseration_thesis](https://en.wikipedia.org/wiki/Immiseration_thesis)

------
binalpatel
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
Are there 2-3% balance transfer cards?

~~~
binalpatel
Initial fee of 2-3% of the balance to transfer, then 0% APR for a 1 to 1.5
years normally.

------
stryan
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
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.

------
ng-user
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
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.

------
mwexler
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.

------
steve19
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.

------
twinkletwinkle
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
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-
aver...](http://www.theatlantic.com/business/archive/2016/04/the-
average-29-year-old/479139/)

------
jordanlev
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').

------
angersock
> _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".

~~~
forrestthewoods
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
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
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.

------
bogomipz
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.

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

~~~
k__
I only use debit cards, because I can get withdraw money on any ATM with it
without additional costs.

~~~
kazinator
"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__
It's a visa card, but without credit.

