Despite a willingness by millennials to take on massive amounts of debt through an expensive college education, new research for Visa indicates that fewer millennials are spending money they may not have by passing on credit cards.
According to Visa’s latest report for 2018, approximately 28 percent of millennials used debit cards for the majority of their purchases, compared to 27 percent who mainly used credit cards. The report also showed that growth for debit card usage (16 percent) has outpaced credit card usage (14 percent) in the millennial age category as well.
These numbers are likely indicative of trends in millennial preferences as well, as the report shows that over half of all millennials avoid using cash most of the time for purchases, instead preferring to swipe a card. It’s also indicative of the growing technologies such as Apple Pay and Venmo, which allow transfers of money to other individuals and businesses with a smartphone app, not requiring a card.
According to Visa, millennials will become the main focus of their company in the next four years, as they prefer to use debit/credit cards more than any other population group.
“In the next four years, millennials will become the customer segment with the greatest personal income, growing to an aggregate $8.3 USD trillion by 2025,” the report notes. “At that time, millennials will represent 75 percent of the workforce and 46 percent of total US income.”
Despite the fact that credit card companies are starting to realize the value of millennials and have begun shifting resources to them, it is still a good idea for millennials to avoid credit cards until they are on stable financial ground. While credit cards with 0 percent APR for 9 months may seem like a gift, racking up thousands of dollars in credit card debt is notoriously easy to do when you are in college.
Even though it may be difficult for millennials to save when they have expenses such as rent, utilities, and student loan payments, it is definitely better to pay bills immediately with cash, rather than allowing the debts to accrue on a plastic card to eventually be paid off. Using a debit card or a credit card with a low credit limit can help prevent individuals from living outside their means.
