Millennials See a Cashless Future but Lack Credit Knowledge: Study
A TD Bank survey finds millennials often fall short on using credit properly.
March 12, 2019 at 03:22 PM
3 minute read
Student Loan DebtThe original version of this story was published on Law.com
Millennials need guidance when it comes to building and maintaining healthy credit habits, TD Bank reported Tuesday.
This comes at a time when four out of five millennials believe society will eventually become cashless.
A TD Bank survey found that 23% of millennials do not have a credit card, and are the age group most likely to prefer cash while traveling.
Half of millennials reported using between 31% and 90% of their credit limit, well over the recommended utilization rate of 30% or less. Thirty-two percent put their credit health at risk by failing to fully pay off their cards each month.
A quarter of millennials did not know their credit score. TD Bank said this could handicap them when applying for credit cards or loans, getting approved for a mortgage, buying a car or making other major purchases.
"The data is a bit concerning — it shows that a significant knowledge gap exists for millennials when it comes to credit, especially compared to prior generations," Mike Kinane, head of U.S. Bankcard at TD Bank, said in a statement.
"We're relying less and less on cash, and while credit cards may not be a millennial's payment method of choice, it's still critical that they develop financial knowledge and habits to properly position themselves for sound credit health down the road."
MARU/Matchbox conducted an online survey and interviews in March 2017 among 1,002 consumers, and followed with a second survey among 1,000 respondents in August 2018, using the Springboard America panel to speak with 1,000 consumers.
According to the survey, 30% of millennials have let their credit card rewards expire, compared with 14% of Gen Xers and 9% of baby boomers, even though they are likelier than other generations to pay for a group outing in order to earn rewards.
TD Bank said this finding was surprising given that millennials were the generation most likely to carry a balance on their credit card.
In addition, millennials spent $2,447 annually on dining, well above the $1,923 Gen Xers spent and $1,486 boomers spent.
TD Bank noted that if millennial restaurant goers were using a card with 2% cash back on dining, they could be earning nearly $50 in rewards each year. It said that could pay for more than two weeks of coffee from a coffee shop, or nearly four months of a Netflix subscription, citing a UBS study.
About two in five millennials in the study said they were willing to help their children establish credit through a secured card or help with student loans. At the same time, 55% of all survey respondents — and 70% of boomers — said they were not willing to help their children establish credit.
"Perhaps born out of growing up during the financial crisis and feeling the impact of student loans, millennials are driven to set their kids up for financial success and teach them good financial habits," Kinane said.
"Through education and options like secured cards, younger generations can learn the responsibilities of having a credit card and start establishing good credit at a young age. It's also worth noting that length of credit history is a significant factor in credit scores."
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllTrending Stories
- 1Gibson Dunn Sued By Crypto Client After Lateral Hire Causes Conflict of Interest
- 2Trump's Solicitor General Expected to 'Flip' Prelogar's Positions at Supreme Court
- 3Pharmacy Lawyers See Promise in NY Regulator's Curbs on PBM Industry
- 4Outgoing USPTO Director Kathi Vidal: ‘We All Want the Country to Be in a Better Place’
- 5Supreme Court Will Review Constitutionality Of FCC's Universal Service Fund
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250