A new study shows only three in ten American credit-card-holders had a chip-card.
A new study shows only three in ten American credit-card-holders had a chip-card. - 
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Millennials seem to be avoiding credit cards. A study published on Monday by Bankrate.com says younger adults prefer debit cards because they don’t want to fall into debt — or, in the case of people with student loans, further into debt.

When Bankrate analyst Jeanine Skowronski first looked at the data, she thought she saw naiveté. These younger adults who shun credit cards didn't seem to know they would need a credit history when they wanted to buy a car or a house.

Then she did some interviewing.

"I talked to a lot of millennials that said they were going to get credit cards, but they weren't so thrilled with it," she says. "They were like, 'I know I have to do this because I want to rent an apartment,' or 'I know I have to do this because I’m getting married, and I want to buy a home — but if I didn't have to, I wouldn't.'"

That sounds pretty smart to Marc Fusaro, an economist at Arkansas Tech. Millennials have figured out what economists — and businesses — have known for years: "Hands down, if people are using a credit card, they will spend more money," Fusaro says. 

One possible caveat is this recent study from researchers at Carnegie-Mellon University, who expected to confirm the general consensus with a new experiment, but then didn't. They gave consumers an incentive to use credit cards for lunch to see if that led them to buy pricier meals. They identified two kinds of credit-card users in their study group: “Convenience users,” who pay off balances in full every month, spent more; “revolvers,” who carry balances and pay interest and fees, spent less.

In general, though, Fusaro's research shows that some consumers used debit cards to counter the tendency to spend, and to avoid racking up interest.

"A debit card is a check on how much money I can spend," he says.

Millennial spending by the numbers:

63 percent

 That's the big number here. 63 percent of consumers aged 18 to 29 don't carry a credit card at all, and 23 percent carry just one card. Next to no millennials have more than two cards.

35 percent

 That same figure for adults aged 30 or over — only a little more than a third have no cards. The older set was also far more likely to carry a lot of plastic. Of the consumers with two credit cards, Bankrate found, about two-thirds were over 50.

3 to 1

 A recent Creditcards.com survey found millennials prefer debit over credit three-to-one, and they don't use cash nearly as often as their elders, especially for small purchases. But young people aren't alone — an April study from the Fed found debit-card use has risen across the board since 2000. And checks? Forget it.

$29,400

 The average debt for graduating seniors from four-year colleges in 2012, according to Project Student Debts. Entering adulthood with this burden and growing up during the Great Recession could be making millennials very debt-adverse, Bankrate says.

40 percent

 The number of millennials who pay off their credit card bill each month. Per Bankrate's own study, that's only a portion of a pretty small group, but the idea of paying off purchases on time could be scaring other young adults away from getting a card at all.

A separate survey from BMO Harris points to a possible reason for the slow payment. They say 39 percent of millennials — defined here as 18- to 35-year-olds — erroneously believe keeping a balance on one's card can boost credit scores. In fact, the opposite is true.

628

 The average millennial's credit score, according to Experian. Regardless of their attitude toward paying on time, waiting to get a credit card can make it harder to build a credit score. Let's look back at the older set, with the George Costanza wallets full of credit cards. Baby Boomers average a credit score of 700, and Generation X averages 653.


CORRECTION: An earlier version of this story stated 63 percent of consumers aged 18 to 24 don't carry a credit card at all. The correct consumer age bracket is 18 to 29. The text has been corrected.

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Follow Dan Weissmann at @danweissmann