The usage of credit cards among Millennials have become complex these days and they cannot be placed under the same credit card umbrella as of any other age group. According to the fed data recent analysis by the NY times, “ Since 1989 the percentage of Young Americans who falls below 35 years age, holding credit card debt has now fallen or you can say there is a drastic fall in the percentage of holding credit cards.”
The era of the financial crisis began since 2008 when some older age Americans also have shunned the credit card debt. But for the young age group (Millennials) the decline in percentage of holding the card burden has been more rapid than any other age group, the analysis of Consumer Finances survey shows.
David Robertson, The Nilson Report (newsletter) publisher, said,“It’s crystal clear that Millennials aren’t interested in owing a debt burden in the way their parents were or are.”
In the last few years credit cards have helped the young generation to make big purchases and to develop a comfortable credit history. It would be much harder to apply for a home mortgage if one’s credit history is not substantial enough.
According to a report of the Federal Reserve Bank of New York, released on Tuesday, the overall use of credit cards by Americans is moving very slowly: There’s an increase in Household debt by $35billion to $12.29 trillion. The rise of 0.3 percent takes place during the 2016 second quarter, when compared to the increase of last quarter, which was driven by auto loans and credit cards.
In the recent months, the number of people who are struggling to pay their dues are reportedly less. On the other hand, many young people are restrained by the recent law passed after the financial crisis and huge student debt burden.
A 32 years old employee, named Jason tower, of a private equity firm, had watched his sister and father closing the family furniture store after their credit line cut off by banks, during the financial crisis. Although he didn’t owe any unruly debt, but he still planned to cut up his credit card in 2010.
Mr. Tower added, “ I could see what has happened in the decades and what’s going on now, this is not an ideal situation.”
I expected the disinclination to debt among Millennials. Credit cards are ideal for big purchases like tv, computers, washing machines or anything essential for households.
Mr. Tower, a prime example, whose job is to lend money to small business owners has confessed, to him the credit card debt risk outweighs the benefits so he prefers to use Cash, PayPal or Venmo for his purchases. “I don’t want to spend too much, it’s not a good idea and wanted to save for my rainy days.”