The younger generation might think they’re smarter than their parents, and that might be true when it comes to technology. But it’s definitely not when it comes to credit cards.
A recent study by a consumer credit reporting agency Experian, shows that Millennials (those between the ages of 19 and 29) carry higher credit card balances compared to that of their elders – even though they have fewer cards in their wallets.
That’s understandable, Experian officials say.
“We found that Millennials are in need of the most guidance to improve and build their credit health,” says Michele Raneri, Experian’s vice president of analytics. “The younger generation are still building their credit, but with the right combination of experience, credit education and choosing credit offers wisely, the 20s can be used as a time to demonstrate creditworthiness and build a positive credit history.”
Here are some other interesting details from the study…
- On average, Millennials have one credit card and carry a total credit card debt of $2,682.
- Generation-Xers (30 to 46 years old) have 2.13 cards and $5,343 of credit card debt.
- Baby Boomers (47 to 65) own 2.66 credit cards. These older folks (30-65) carry a balance of $5,347.
- Greatest Generation (ages 66-plus) carry 1.9 credit cards with an average balance of $3,044.
Millennials also have the lowest credit score – 628 compared to Baby Boomers’ 700 – which isn’t all that surprising. Those younger Americans are trying to build a financially healthy life coming off a recession. Building credit is hard enough in a stable economy, but building credit as a new credit user during a recession can seem downright impossible.
What’s more shocking to us is how much debt Boomers and Gen-Xers are carrying. That’s dangerous for their own retirement plans, as well as teaching their kids the wrong lessons about credit and debt.
In fact, if you’re struggling, it’s actually worth it to be honest with your kids. You can ease your children’s fears by letting them know that your family is not alone in this battle. Millions of other families are going through the same drama. It’s also an appropriate time to let them know that hardships happen, and that preparing for financial hardships is smart.
For more tips on how to talk to your kids about credit cards and credit card debt, visit Consolidated Credit’s section on how to handle credit card debt effectively.