They might not be the “post-credit card generation” after all.
Back in January, NBC News declared “Millennials hate debt” and “aren’t crazy about credit cards.”
It wasn’t breaking news. Last summer, Bankrate did some research and insisted 2 in 3 Millennials didn’t have credit cards. Common wisdom was that the generation that came of age during the Great Recession would be the first to reverse its reliance on plastic.
Alas, it’s a new summer, and there’s new research. This time, it’s from FICO, which just today ran this headline: “Millennials Still Want Credit Cards.”
How many? “83 percent of Millennials (25-34 years old) use credit cards to fund their lifestyle,” FICO says.
That’s not the worrisome stat, however. This is…
Moreover, 31 percent of consumers 25-34 years old carry a balance of $1,000-$4,999 over each month, on their credit card. This was significantly more than all the other age groups with only 22 to 23 percent holding the same debt level. The 25-34 year olds also had more balances in the $5,000-$9,999 range but fell to second place when balances went over $10,000; the top spot went to the 35-49 year olds.
Credit card debt in the thousands is more troublesome for younger people, since they typically earn less as they launch their careers and are saddled with students loans. That may explain this even more disturbing stat: Half of the Millennials FICO polled have at least three credit cards – “and 19 percent plan on using them to buy big-ticket items such as a new car.”
While that will certainly help those Millennials maximize their reward points, it’s a dangerous game, says Consolidated Credit president Gary Herman.
“Putting so much on your credit card at one time only makes sense if you can pay off the balance when the next bill comes due,” Herman says. “Otherwise, you earn a few dozen rewards points while possibly paying hundreds or even thousands in interest – especially if they’re only making the minimum payment.”
In fact, that’s exactly what’s happening, according to FICO: “26 percent of those 18-24 and 17 percent of those 25-34 are making only the minimum payments each month.”
Herman suggests Millennials go old-school: Pick up their phones and call Consolidated Credit at 1-888-294-3130 for a free debt analysis.
“We can help Millennials reduce their total credit card payments by 30 to 50 percent,” Herman says. “With so many prime earning years ahead of them, those savings will really help them with buying a house, starting a family, traveling the world – whatever their goals are.”