Tech-savvy Millennials transitioning to debit cards
Plastic? No thanks, say Millennials.
Over the course of the recession, the percentage of Americans ages 18 to 29 who have cut credit cards out of their lives has doubled, according to new research by credit score provider FICO. Sixteen percent of Millennials did not have a single credit card by the end of 2012, up from 8 percent in 2007.
As a result, credit card has dropped from an average $3,073 in October 2007 to $2,087 sic years later. Student loan debt, however, has ballooned from an average of $6,490 per person to $11,444.
FICO attribute this evolving Millennial mindset to a couple of factors. The CARD Act, writes Frederic Huynh on FICO’s Banking Analytics Blog, put more requirements on issuers before a credit card could be issued. For example, consumers under 21 are required to show an ability to pay off their debt or have a co-signer on the card. Secondly, Huynh observes, the recession has been an eye-opening, behavior-changing revelation for Millennials, who are transitioning to debit cards to make purchases, also a reflection of the growing use of mobile payments by this more tech-savvy generation.
As Millennials’ credit card has decreased, their credit scores have risen. Those with rated excellent FICO scores of at least 760 incresed from 8.6 percent ix years ago to 11.2 percent in 2012.
Perhaps these Millennials could teach their parents well. Consumers who are at least age 40 are also managing their credit card debt, but they have taken on more mortgage and auto debt, and have more overall debt today than they did in 2005. As their debt has increased, their FICO scores have dipped among 40-49-year-olds (1.7 percent), 50-59-year-olds (1.8 percent) and 60 years and up (3.8 percent).
Related story: Millenials shed credit card debt, take on student loans. Click here to read more.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.