Question of the Day: If Millennials don't have credit cards, how are they paying for stuff?
In a curriculum planning meeting for an upcoming summer program we’re participating in, Tim mentioned that Millennials don’t use credit cards. Finding this hard to believe (HOW DO THEY PAY FOR THINGS???) I did a little digging, and it appears to be true:
So, that brings me back to my question, “HOW DO THEY PAY FOR THINGS???” This article from Bankrate suggests that the rise of the debit card, and its ability to make transactions quick and easy, has decreased reliance on credit cards. Pointing out you can also shop online with debit cards (a must for many Millennials) also answers the question of how Millennials do their shopping without credit. The same article also suggests that Millennials are debt-averse and live more frugally without credit; in other words, they don’t pay for as many things in the first place. Finally, the article suggests Millennials save and then dip into that savings to make purchases; the cycle of saving and then dipping in continues, and they finance their lifestyles that way, without debt.
Creditcards.com publishes results from a Federal Reserve Bank of Philadelphia survey that indicates Millennials also use prepaid cards more than any other generation:
So, it appears Millennials are also buying prepaid cards and reloading them with value as they need it to make purchases. The entire study is located here, and I think could be used, with a little planning on the teacher’s part, to generate many opportunities for reading charts and graphs and interpreting data.
This video summarizes the current dangers of completely avoiding credit cards (major bummer for your credit score). I hope this Question of the Day helps as you celebrate April as Financial Literacy Month with NGPF.
About the Author
When I started working at Next Gen Personal Finance, it's as though my undergraduate degree in finance, followed by ten years as an educator in an NYC public high school, suddenly all made sense.