Inside the Mind of a Millennial: Credit Cards

Millennials, Payments

Two weeks ago, I returned home from class to chef up some of my famous homemade meatballs. As I walked into the kitchen daydreaming of gouda stuffed turkey and fresh parsley, I noticed something on my roommate’s computer screen. He was sitting on the couch scrolling through credit card reviews. My interest was piqued.

We started discussing his options. How can he start applying? What credit cards can offer the best value for his lifestyle? Should he just continue to stick with debit? It was a short conversation that we planned to revisit after some more research (and meatballs).

Later that week, I was out for a post-meeting beer with a few classmates. When the check was dropped by the table, the discussion shifted to payment methods. Not surprisingly, the majority of my classmates took out their debit cards. One of them even stated, “I have a credit card, but I always leave it in my apartment. I don’t spend money that I don’t have.” For a second time, college students were on the subject of payments.

I began to explore not only millennial debit/credit usage statistics, but also did some digging into how college students feel about both. I examined research from recent studies and interviewed my roommate on topics like credit cards, shopping behavior, and e-commerce. His responses to a few questions along with some key take-aways are below.

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What is the number one reason you’re considering starting to use a credit card?

“Building credit is the primary reason. I wish my parents would have encouraged me to start using a credit card earlier to build my credit.”

This response is consistent with studies that found the most important payment card feature for 62% of surveyed college students was “ability to build credit.” This was followed by “having rewards program” (59%) and “having budget controls” (56%).

What are the two most important things to you after doing some evaluation of different card offerings?

“No annual fee and rewards programs that are tailored to my lifestyle. At this point, I’m keen to use a card that has cash-back rewards. I will say that after doing some research and speaking to friends who have used a credit card for a long time, some of the highest rated cards have annual fees that I’m just not yet comfortable paying.”

In another study of college students, subjects were asked to pick five characteristics of credit cards from a larger list that were most important. No annual fee was right at the top, whereas rewards was a bit further down the list.

How often do you expect to use credit?

“As a graduating senior, it’s hard to predict my spending patterns in the next chapter of my life. Overall, I expect to use my credit card on almost every purchase I make. This is especially true for the three months that I will spend traveling through Europe starting in April.”

Here, his response is not in line with recent studies. SallieMae’s report on how college students manage finances states that credit card usage is less common than debit, mobile payments, and even cash. The report is chock-full of interesting data and can be read here.

When shopping online, what is your preferred payment method? Do you make payments on your mobile device?

“I currently use my debit card for all online purchases. Lately, I’ve been catching myself using my mobile device to make purchases a lot more often. I think that moving forward there will be some serious changes in how we make online purchases.”

This comment reinforces the current trend toward mobile payments. At Sezzle, we couldn’t be more excited to be part of this trend. With all the data suggesting credit card adoption among millennials has slowed, and debit usage is spiking, we believe the world of payments is primed for big changes.

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How do you think payments will change in the coming years? Should I dedicate a Shopify store to selling a frozen version of my homemade meatballs?

Both important questions. Let us know what you think in the comments section below!

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