Millennials are Elastic about their Plastic
This generation has its own ideas about credit and debit cards.
Millennials love their plastic, but not like you might think.
The youngest Millennials are almost all in college now, and a new survey by Sallie Mae says they’re savvy about their credit cards. Interviews with 800 Millennials revealed, “69 percent report an average monthly balance of $500 or less” and “63 percent pay the full balance due each month.”
Of course, skeptics may wonder if Mom and Dad are slipping them the cash to make those payments, but that’s not the case: “Nearly three-fourths (73 percent) pay the bill without assistance from a parent or other adult,” Sallie Mae says.
That said, Millennials aren’t traditional about their cards. While 56 percent have at least one credit card and 85 percent have debit cards, many make purchases with their phones – 77 percent use “mobile pay” options like Apple Pay.
Another study points to a possibly dangerous way of using plastic. An organization called The Center for Generational Kinetics asked 1,000 U.S. employees about their attitudes toward “pay and paycards.” The latter is their term for prepaid cards, which are often used by impoverished Americans who can’t afford bank accounts due to the minimum balances or fees or both.
Given their intended audience, it’s interesting that the study shows, “One third of Millennials – over 29 million workers – said that they found the concept of a paycard valuable and 64 percent believe paycards should be offered by employers.”
Consolidated Credit president Gary Herman says anyone planning to put their money into prepaid cards rather than banks needs to do their homework.
“If you do the math and can indeed save more money, I’m guardedly optimistic,” Herman says. “But hands down, the best-case scenario is having enough money to open a bank account with a minimum balance that excludes all the fees. Whether it’s a bank or a prepaid card, I don’t think you should be charged for letting someone hold onto your money.”
If you don’t have enough to make keep such a minimum balance, Herman says it’s likely because you have so much credit card debt.
“In my 20-plus years working here, I’ve seen good people get into a bad spot. They can’t pay down their credit cards, so the interest and late fees are eating them alive. That means they can’t open a bank account without paying even more fees – which means they’re now paying for both the money they owe and the money they have.”