The financial meltdown and recession led many Americans to experience significant financial problems, and while some have returned to their former credit card habits, one demographic seems particularly averse to doing so.
Consumers under the age of 35 have been relying on their credit cards in their everyday lives far less than those in older demographics in the last few years, according to new data from Auriemma Consulting Groups. Today, 44 percent of those younger consumers say they have no interest in using credit cards as their main payment method, and are backing that up with action.
Only 20 percent of consumers under 35 use their credit cards to make most purchases, compared with 29 percent of those between 35 and 54, and 34 percent who are older than 55, the report said. Instead, they seem to rely on debit and cash far more than their older counterparts. In all, 27 percent of young consumers say they use cash primarily, and 49 percent say they rely on debit. The final four percent say their primary payment method comes in other forms.
“The younger segment has been trained to think about debit, but not to think about the value of credit,” said Matt Simester, managing director at ACG. “When you compound this with the difficulty younger consumers have had in getting credit, there is a clear need to develop products specifically for the younger segment of the population.”
Simester also noted that this trend away from credit card use among young consumers might become problematic for lenders in the coming years, the report said. As such, it might be time for those institutions to rethink their strategies for marketing to younger people such as highlighting the value and benefits these accounts can provide them.
Meanwhile, debit use among the older groups comes in at 45 percent for both demographics, while cash use dwindles with age, the report said. In all, just 19 percent of those 55 and older use actual cash to make most of their purchases, compared with 24 percent those those between 35 and 54.
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Today, many consumers are trying to reduce their outstanding credit card debt so that they can better handle their overall finances, especially because millions learned the hard way during the recession that high outstanding balances can make it harder to thrive financially.
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