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How Millennials Became Spooked by Credit Cards

nytimes.com

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Re: How Millennials Became Spooked by Credit Cards

#11

Post by icebraining »

ljoshua wrote: post #2

Huh, that's weird. I fall into the age bracket mentioned in the article, but use a credit card for nearly every single purchase for 1) the fraud protection benefits and 2) points. With the anecdotal group of people I know most people are fine using CCs. On the other hand, I pay off the statement in full every month, and therefore never have revolving debt that extends beyond 30 days. The article wasn't clear whether…

That was my first thought - are they avoiding credit cards or credit card debt? - but later in the article it says:

"more recent data has also suggested that millennials are using credit cards less than people of a similar age did in the past"

Re: How Millennials Became Spooked by Credit Cards

#12

Post by ianai »

h4waii wrote: post #6

What's really scary is the fact that many of these individuals don't consider the benefits and rewards of using a credit card -- free flights, cash-back, insurance and extended protection, and best of all it's not your money. You get to hold on to your cash for a month's worth of interest and you get fraud protection. Credit cards are tool and, just like most tools, should be used with proper awareness and thought-pr…

Im willing to bet people don't value fraud protection because they haven't been a victim yet. I keep the number of places that see my debit and checking numbers as few as possible. Plus, the credit card companies themselves don't view fraud the same way or with alarm.

Re: How Millennials Became Spooked by Credit Cards

#14

Post by johnward »

h4waii wrote: post #6

What's really scary is the fact that many of these individuals don't consider the benefits and rewards of using a credit card -- free flights, cash-back, insurance and extended protection, and best of all it's not your money. You get to hold on to your cash for a month's worth of interest and you get fraud protection. Credit cards are tool and, just like most tools, should be used with proper awareness and thought-pr…

> This article really just emphasizes the fact that we are living in an age of complete lack of personal responsibility and self-control, where you can blame an institution for your inability to spend.

Not having credit cards is one way to control yourself.

Re: How Millennials Became Spooked by Credit Cards

#15

Post by douche »

ljoshua wrote: post #2

Huh, that's weird. I fall into the age bracket mentioned in the article, but use a credit card for nearly every single purchase for 1) the fraud protection benefits and 2) points. With the anecdotal group of people I know most people are fine using CCs. On the other hand, I pay off the statement in full every month, and therefore never have revolving debt that extends beyond 30 days. The article wasn't clear whether…

This. It's really not that hard to do correctly. The fraud protections are much better, at least in my experience in the US, than using debit cards, you get the reward points, and you can "float" expenses over the course of the month, as long as you pay it off every statement - which is nice if you only get one paycheck a month.

Re: How Millennials Became Spooked by Credit Cards

#16

Post by ourmandave »

h4waii wrote: post #6

What's really scary is the fact that many of these individuals don't consider the benefits and rewards of using a credit card -- free flights, cash-back, insurance and extended protection, and best of all it's not your money. You get to hold on to your cash for a month's worth of interest and you get fraud protection. Credit cards are tool and, just like most tools, should be used with proper awareness and thought-pr…

I always thought the free flights, etc. was like the casino comp'ing you free drinks.

Re: How Millennials Became Spooked by Credit Cards

#17

Post by johnward »

sotojuan wrote: post #5

This is interesting and I am glad less people are using credit cards. It's really not a good idea for the majority of people in my experience. I got mine when I was 20 and I've never paid it late or gone over my limit. Most of the time I coordinate my payments with the day I get my direct deposit (I've tried automatic payments, but too paranoid that they might not work!). Discover gives me pretty good Amazon cash bac…

Maybe I lack self control but it was really easy to go from paying off $30k in credit card bills every month, to not having that income anymore, to being $30k+ in CC debt.

Re: How Millennials Became Spooked by Credit Cards

#19

Post by jawns »

h4waii wrote: post #6

What's really scary is the fact that many of these individuals don't consider the benefits and rewards of using a credit card -- free flights, cash-back, insurance and extended protection, and best of all it's not your money. You get to hold on to your cash for a month's worth of interest and you get fraud protection. Credit cards are tool and, just like most tools, should be used with proper awareness and thought-pr…

One thing that even people who consider themselves financially savvy (e.g. those who pay off the credit cards in full each month rather than carrying a balance) often fail to realize is that credit card companies are middlemen; the fees they charge the merchant -- typically around 3% of each transaction -- ultimately get paid for by someone, and that someone is you.

If we all were less beholden to our credit cards, and/or the public and retailers were more comfortable with higher prices for credit card purchases, we might see cash prices go down. The savviest among us would probably lean more on cash for smaller purchases and reserve credit cards for only big-ticket purchases (because of the transaction/purchase protection benefits).

Re: How Millennials Became Spooked by Credit Cards

#20

Post by biztos »

While I realize it may lead to less (reckless) spending, this is probably a good thing. Certainly my generation overused credit cards, and many of us learned painful lessons from it. I sure did, though even now I have a somewhat cavalier attitude towards the plastic.

Sure, there are lots of benefits to credit cards if you have the discipline to use them to your advantage. But most people don't have that discipline, and the banks try very hard to loosen what discipline you do have.

As an American living in Europe I find the different attitudes to credit cards over here very interesting.

For instance in Germany I had a Visa and now I have a MasterCard, at a big fancy bank, and both are automatically paid in full from your account on the first of every month. It might be possible to run up debt on a credit card in Germany (or it might not) but it's not the default action like it is in the US. No "click here to pay the minimum."

Also, lots of places won't even take credit cards in Germany. Like Ikea for example. Instead these places will take your "EC card" which is like an ATM card in the US, i.e. a direct debit from your account.

While the Germans are notoriously paranoid about debt -- hyperinflation will do that to you -- some other countries are more freewheeling. In Hungary most people don't have credit cards, but lots of places (including Ikea!) accept them.

(Slightly complicating this whole story is the fact that in Europe most debit cards are also Visa or MasterCard, which I assume is transparent at the point of sale.)

However, back in debt-averse Germany, unsecured personal credit is much easier to obtain, at much better rates, than in the US. So if you're gainfully employed and you really need to buy that used speedboat to set the Spree on fire, they've got you covered.

[edit: grammar]

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