Millennials Aren’t Using Credits Cards

Millennials Aren’t Using Credits Cards

If you were born sometime in the 80’s and your current age is between the mid-20s to mid-30s, you can call yourself a millennial, or what some people call the Generation Y. According to Deloitte Consulting Group, millennials describe themselves as goal-oriented, realistic, determined, tech-savvy and lifestyle-driven. These are the very same words we can use to describe about millennials and their finances.

According to CNBC Money, millennials are far better at handling their finances than their parents, the baby boomers. This is in line with the survey conducted by Charles Schwab which reveals that millennials are keener to creating a written financial plan as compared to the previous generation. Additionally, the study reports that millennials are more vested about investing.

But what about millennials and their behavior towards credit cards? The results may surprise you. But first, here are some critical data that will help you understand why millennials are not very taken with credit cards and their underlying reasons.

Millennial Credit Card Usage Stats

Well, here’s a startling revelation: millennials are more afraid of the credit card than dying.

This is quite a surprising statement to make, but various researches and studies tell us that millennials are not at all that fanatic about the plastic. In a study conducted by Credible, it was found that 33.2% of the respondents feared credit card debt, as opposed to the 20.4% who feared dying and 16.8% who feared war. And in line with fearing credit card debt, the same study also revealed that 33% of the respondents feared the credit card’s interest while 32% feared about making the monthly payments.

Most people think that owning a credit card is a convenient way to pay for purchases. After all, who wouldn’t want to get their hands on a new gadget without shelling out a single dollar? However, millennials seem to think otherwise. Although they think convenience is still one of the main reasons for getting and using a credit card, this is not their topmost priority.

According to a survey conducted by, millennials are getting and using credit card according to this importance:

  • 59% – rewards
  • 55% – emergencies
  • 50% – convenience
  • 32% – to pay off large purchases
  • 30% – to build credit

With that said, related studies also found that 1/3 of millennials own a credit card.

Lowest Number of Credit Card Holders Since 1989

The lack of reliance to plastic is not a recent event. The Gallup Poll in 2014 found that credit card use in general has been declining over the years, particularly during and right after the Great Recession. Also, younger adults, those who are 21 years old and below, were not allowed to apply for a credit card due to the CARD Act of 2009. The implementation of this policy has resulted to a decline of credit card applications by 40 percent.

9 Reasons Why Millennials Avoid Credit Cards Like the Plague

2008 Financial Crisis (The Great Recession)

The millennials had the opportunity to see how the Great Recession affected the economy and their families on a more personal level. The 2008 financial crisis left a bitter taste to the mouth, so to speak, and scarred them a little too deeply.

According to the Director of Financial Security and Mobility at Pew Charitable Trusts, the millennials’ experiences during the Great Recession made them a little sensitive. The event happened just as they were about to enter college or to start a real job, and that experience scared them about taking on debt.

Also, the millennials do understand that they may need it to establish and maintain excellent credit to finance significant expenses such as a house; however, most of them feel that this is not the priority at the moment. This has left experts to surmise that this generation is not very inclined to conform to the idea of the American Dream, unlike the generation before them.

Living at Home Post-College

It’s also worth considering that most young adults didn’t go independent right after they left college. In a 2012 study conducted by Pew Research Center, it was found that 36 percent of the respondents were still living under their parents’ roof at that time.

In Pew’s 2016 follow up study on the matter, the millennials are indeed taking their time to “boomerang” and are staying at their parents’ for a lot longer than the previous generations during their age. According to that said research, 15% of the respondents (25-35-year-olds) stayed or staying with their parents after college.

Living at home after their university stints did not seem to pressure millennials to start building credit right away. However, experts agree that it’s only a matter of time before they begin to see the importance of the plastic, especially when they need to apply for some serious obligations like home mortgages.

Alternate Payment Methods

The older generation has always known cash as the best, and perhaps, the only method of payment. And then, later on, the debit card came into the picture.

Millennials were raised at a point when technology was evolving quite rapidly. This is the generation of individuals who would do almost anything right on their smartphones, including shopping. And one would think that most of these people would actually opt for the newer payment methods like Paypal, Apple Pay and other forms of electronic money transfer.

It’s true that the millennials did have more options when it came to payment method, but according to a recent survey conducted by GoBankingRates, 58% of the millennials preferred cash to other payment options. Using credit card is not their top choice.

As millennials become more financially aware of their habits and decisions, they also realize that opting for cash over others allow them to track and keep spending to a limit.

Skyrocketing & Crippling Student Loan Debt

Student loans also play a critical role as to why most millennials averse credit card debt. The Project for Student Debt found that student loan debts have been rising from Great Recession up to present by 6 percent. In 2012, the average student loan debt has amounted to almost $30,000.

What this means for millennials is that getting a credit card is like taking on another debt, on top of the existing student loans they need to pay off well into adulthood. They believe that not having to deal with a credit card bill from month to month comes as a relief, as it’s one financial obligation they don’t have to worry about.

Fear of Taking on Debt

It must be established that the millennials are not exactly averse to taking on credit cards. What they’re most scared of is the idea of debt. And credit card is a like a “debt carrier” basically because these cards allow a user to make a purchase without an upfront payment. The payment will come later, making credit card use a form of a short-term loan.

Like what has been said earlier, the millennials are more afraid of credit card debt than the idea of death and war. This may sound a little bit too much, but referencing on the studies conducted on this matter, we also come to understand why millennials are indeed afraid to take on debt.

First, they already have student loans to deal with. Student loans are long-term loans which they need to deal with well into adulthood. Some people never even manage to finish paying off their student debt into retirement.

Also, the millennials have also seen first-hand the struggle of surviving in a tight economy (during Great Recession). When you add more debt into the mix, the battle becomes even more challenging.

They’re Living More Within Their Means

It does seem like that the millennials have taken a leaf from their book of learning in the Great Recession that they’re now dubbed as the money-conscious generation. Think that the millennials are spoiled brats who spent their money to trivial things? Think again. You are underestimating their personal finance savvy, it seems.

According to a research conducted by T. Rowe, involving 3,000 adults aged 18 years old and above, it was found out the millennials are more keen about their money than their parents.

To compare the two generations, the study revealed that 75% of Gen Y were more diligent in tracking their spending than the 64% of Gen X. Also, 67% of the Gen Y respondents reported that they are building and sticking to their budget, when only 55% of the Gen X does. Lastly, 40% of Gen Y was making huge contributions to their retirement plan, as compared to 21% of Gen X during their age.

The volatile market of the Great Recession made millennials to become more conscious of their finances. This generation is more inclined to save than to spend, and are even more open to the idea of investing.

Higher Desire for Freedom & Travel (Wanderlust)

The millennials are fond of adventure, and this shows on the statistics in the travel industry. According to the data with United Nations, the millennials represent a good number in the travelling sector, consisting approximately 200 million.

The craving for new experiences outside their comfort zones urges millennials to spend more on experiences rather on the traditional expenses like a car or gadget. The millennials don’t mind giving up some traveling luxuries to satiate their wanderlust and have as much as opportunity for exploration

Traveling young adults don’t mind sharing rooms in a cheap hostel instead of a well-appointed, expensive hotel rooms. The millennials are also more open to experience the local lifestyle in their destination, so they’re also more inclined to opt for local and cheaper food and other experiences. Therefore, instead of swiping a credit card to book a hotel room, the millennials would rather spend their cold cash on experiences that are more meaningful to them.

Generational Culture Shift

The way millennials see money is more different than the way their parents did, but that’s because of important reasons. First, millennials had to deal with an expensive college education and even more costly student loans. This pushes them to delay some milestones early like acquiring their own home (as compared to their parents).
Moreover, both generations had a tough time entering the workforce. In fairness, both generations went through periods of recession which taught them a thing a or two about the importance of a stable tenure. However, the millenials are earning less than their Gen X counterparts.

We can’t blame the Gen Y if the cultural and financial gap taught them to be wary of their financial decisions, and that obviously, included averting as much as possible from credit card debt.

Focus on the Long Term

You’ve probably heard the acronym YOLO (you only live once) in the past few years, which is connotative of this generation seizing the day, then deal with whatever the future holds. But on the contrary, the millennials are always thinking long-term, especially when it came to their finances.

This should explain why more millennials are open to the idea of investing, why they throw a huge chunk of their income towards their retirement fund and why millennials are savvier with budgeting and tracking their expenses.


The millennials seem to live in a whole new era where finances are concerned. Like their general attributes of being determined, realistic and goal-oriented, the Generation Y is picking its financing strategy carefully, and it looks like credit cards are lagging behind in the list.

But that’s not because millennials are not aware of the perks that credit cards bring, or that they are less financially savvy than the previous generation. On the other hand, this awareness is making millennials more thoughtful about their financial options and decisions.

The millennials shunning credit cards is proof that there are cultural shifts in between generations. On the one hand, this is welcome news as millennials are demonstrating their willingness to take a right financial path, even if that means ditching the popularity of credit cards.

Is this trend going to continue to the next generation, we don’t know yet? But what we do know is that the millennials are making financial decisions with some solid basis, and we think that’s good for them.


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