Millennials fear racking up credit card debt
Many millennials are willing to rack up debt when it comes to their college education but new research shows fewer are willing to take on credit card debt, even if it means not using them at all.
A new research study from Visa shows young adults, ages 18-29 use debit cards more than any other form of payment, including credit.
Researchers say the reason for this trend is many millennials are trying to avoid racking up credit card debt, digging themselves into a financial hole. Andrea Finn, Digital Marketing Manager with Royal Credit Union says she understands this concern. "I’m on the older spectrum of the millennials but growing up I watched my parents use credit cards and go into debt and that's a fear that I think a lot of millennials had gone through in their childhood," she said.
Finn says it’s great the young adults are attempting to be financially responsible however this trend could negatively impact them. "To obtain good credit, you have to use it," she says.
Finn says many young adults don’t fully understand the difference between credit and debit. She says it all comes down to education. RCU is taking steps to teach kids financial fitness at the high school level with their student- run credit unions and even at the grade school level.
Monday RCU kicked off a program called Takeover Day. "We'll go into an elementary school and in one day we reach every grade and every classroom, and teach them financial education. And when we leave, we give them a take away that they can take to their grown up at home to show them what they went over," said Kathy Buyze, Financial Education Supervisor with RCU.
Buyze says it’s never too soon to start talking to kids about financial literacy. "We start in the elementary but gosh even for parents with young ones at home, its, its counting those coins, teaching them the difference right away,” said Buyze.
She says by starting early, she hopes students will remember the financial lessons learned in the classrooms. “We have so many generations that don’t know how to manage their money and become smart savers,” said Buyze.
Young adults are encouraged to obtain credit cards to build their credit history but to use them wisely. “When it comes time to buy that first vehicle or the college loans or even down the road, their first home, the creditors look at their credit score and the only way that you get a good credit score is building that credit,” said Buyze.
RCU has a program called The Smart Connection which focuses on 18-25 year olds. The goal is to educate them about life after high school. “We go around and do smart talks with college students to take a look at their debt, take a look at their budgeting, try to set them up for success so that at the end of college,” said Finn.
For more information on RCU’s education programs, see the link attached to this article.