Payment Methods

Millennials Are Shunning Credit Cards

Millennials may know something that their older counterparts haven’t figured out yet: Cash is better than credit cards.

That’s according to data from the Federal Reserve that shows that the number of people under the age of 35 in the U.S. that own a credit card has dipped to the lowest point since 1989, when the Federal Reserve started collecting data on credit card ownership. While older generations grew up with the mantra, "Charge it," millennials came of age during a tough time in the economy when record foreclosures and high unemployment were the norm. Many have witnessed their parents lose their jobs and, in some cases, their homes and, as a result, are wary of taking on debt in the form of a credit card. But being credit card-averse could have some negative implications. For one thing, it may make it harder for them to purchase a car or get a mortgage.

“It will probably take them longer to get access to credit,” said Gregory Elliehausen, an economist at the Federal Reserve specializing in consumer finance, in a report. “In the meantime, their behavior and some of their habits will have already been formed.”

In addition to avoiding getting in over their heads when it comes to debt, millennials aren’t taking out credit cards in large numbers because they are contending with student loan debt and are afraid to spend beyond their means — something lots of people in the older generations have yet to learn. In addition to avoiding credit cards, millennials are also moving toward payment methods that do not require cash or credit. It’s the reason mobile payment apps are more popular among millennials then older consumers. And while the credit card companies hope millennials will change their attitudes and embrace credit cards as a payment method, the Fed doesn’t think that will happen anytime soon.



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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