a decade has passed since Lehman Brothers collapsed, ushering in
the most acute phase of the financial crisis - yet, despite all
the time that has passed many
millennials remain deeply distrustful of banks and borrowed
money, according to a study published
study found that, while a majority of older Americans own credit
33% of adults between the ages of 18 and 29 say they have one. That
is, even as the economy and job prospects have improved, millions
of Americans continue to shun credit - something that is probably
related to the
massive pile of student loan debt, the
bulk of it borne by millennials, who
are defaulting in ever-greater numbers.
that figure might seem surprisingly large, it's actually down from
two years ago, when Bankrate discovered that two-thirds of young
adults said they had no "major" credit cards, defined as cards
issued by either American Express, Visa, MasterCard or Discover.
interviews with several "real-life" millennials, Bankrate said
they hadn't even considered getting a credit card. Others said
they shunned credit cards because of previous financial problems.
never owned nor have ever wanted to own a credit card,” says
Kristian Rivera, 25, a digital marketing specialist in New York
wasn’t really a decision that I made, but growing up I was
warned of the risks of having a credit card and advised to put
off getting one as long as possible.”
don’t want to make the same mistakes our parents made in the
past," Rivera says. "We want to do
things smarter and safer."
millions of Americans, the agglomeration of debt that most people
have accumulated by early adulthood is forcing them to put off
marrying or starting a family. And roughly
one-third of adult millennials are still
living in their parents' basements.
Billups, 29, a U.S. Marine Corps captain stationed in Twentynine
Palms, California, says when he and his wife, Natasha, married
in 2011, they had a combined $40,000 in debt, including credit
cards and student loans. They paid off their debts in 2013, just
2 weeks before Billups was deployed to Afghanistan for the
thing is, we will never have a credit card ever again," Billups
than just credit cards, the couple wants to steer clear of all
debt. They recently opened a photography business, Emmanuel
Photography & Designs, without taking on any debt, and they
plan to eventually buy a house using only cash.
been just wonderful because we don’t have to pay anyone back," he
be sure, young adults aren’t the only demographic group shying
away from credit card use...
it doesn't perfectly align, credit card use is most common among
groups that are also more likely to own stocks. According to one
in three millennials say they would rather
own bitcoin than stocks (though, to be fair, that's probably due
to bitcoin's torrid rally late last year.
a breakdown provided by BankRate:
an annual income of less than $30,000.
black or Hispanic.
card ownership is most prevalent among:
with an annual income of more than $75,000.
who identify themselves as Republicans.
people with higher incomes are more likely to own credit cards:
avoiding credit cards, millions of millennials will find it
difficult to obtain other types of credit - like mortgages or car
loans - when they need it.
Aschoff learned this lesson when he and a group of friends tried
to buy a rental property shortly after college. But since
Aschoff had never had a credit card, he hadn’t developed a solid
credit history and none of the mortgage brokers he spoke with
would qualify him for a mortgage.
to say, this isn’t something I considered," says
Aschoff, 25, of Hoboken, New Jersey.
and one of his business partners, Chris Sorrentino, also 25, say
they now own credit cards only to help with their credit scores.
And building up their credit helped them qualify for a mortgage.
survey was conducted May 19-22, 2016, by Princeton Survey
Research Associates International and included responses from
1,002 adults living in the continental United States. The margin
of error is plus or minus 3.7 percentage points.
now own 3 rental properties near Lehigh University in Bethlehem,
Pennsylvania. In January, Aschoff, Sorrentino and 2 other
partners in their real estate firm — Acrez LLC — purchased a
house in Springfield, New Jersey, with cash. They are now
renovating and hope to resell.
only debt we really take on is mortgage debt," Aschoff
says. “Other than that, debt is not our friend."
the fact that millions of millennials can't even be bothered to
get even a low-limit card, it probably won't come as a surprise
that millennials also don't care about so-called "status" cards
like the American Express Black Card.
millennials well-documented preference for experiences - like
travel - over material possessions, their unwillingness to apply
for credit cards might seem foolish.
all, they're missing out on all those free miles...