CHERRY HILL, N.J., March 12, 2019 /PRNewswire/ -- Though 82
percent of millennials believe society will eventually become
cashless, TD Bank's Consumer Spending Index revealed that they're
lacking when it comes to building and maintaining healthy credit
habits. As the generation least likely to carry cash, according to
the survey, this begs the question of whether millennials are armed
with the proper tools to be responsible card holders.
The Reality: Most millennials' credit habits aren't
healthy
TD's survey revealed some concerning credit habits of
millennials, including:
- Twenty-three percent of millennials don't have a credit card,
and they're the generation most likely to prefer cash (26 percent)
while traveling
- Half of millennials use between 31-90 percent of their credit
limit, surpassing the recommended utilization rate of 30 percent or
less
- Nearly one-third (32 percent) of millennials don't pay their
cards off in full each month, which can damage credit health and be
costly in the long run, especially in a rising rate
environment
- A quarter of millennials do not know their credit score, which
can be a setback 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," says Mike Kinane, Head of US Bankcard at TD Bank.
"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."
The Outcome: Millennials spend more than their older
counterparts, but don't use the rewards they earn
Despite being more likely than other generations to pay for a
group outing in order to earn rewards, thirty percent of
millennials have let their credit card rewards expire (more than
Gen-X at 14 percent and Baby Boomers at 9 percent). This data point
is surprising, given Millennials were the generation most likely to
carry a balance on their credit card.
Additionally, millennials spent $2,447 annually on dining, more than Gen-X
($1,923) and Baby Boomers
($1,486). If they are using a card
with 2 percent cash back on dining, they could be earning nearly
$50 in rewards each year. That
could pay for over two weeks of coffee1, or almost four
months of a Netflix subscription.
The Long-Run: Millennials are leading the way in teaching
their kids good credit habits
Millennials were the generation most willing to help their
children establish credit through a secured card (45 percent) or
help with student loans (40 percent).
That said, more than half (55 percent) of respondents overall
say they are not willing to help their children establish credit.
This is particularly true for older generations, with 70 percent of
Baby Boomers saying that they are not helping 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," said Kinane. "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."
1 Based on the average cost of a cup of
coffee in New York being
$3.12, per a 2018 report by
UBS.
Survey Methodology
MARU/Matchbox conducted an online survey for the first wave of
this study between March 22 and March 28,
2017 and interviewed 1002 consumers. A second wave of this
study was conducted between August 20 and
August 30, 2018 using the Springboard America panel to speak
with 1,000 consumers. Springboard America is one of the
leading online market research communities in the US, giving
Americans the opportunity to participate in surveys and discussions
that influence brands, products and services used every day. Both
waves had consumers representative of the national population. A
random national sample of this size has a margin of error of
+/-3.1%. The data has been weighted by age, gender and region to
reflect the national population.
About MARU/Matchbox
MARU/Matchbox is a professional services firm dedicated to
improving its clients' business outcomes. It delivers its services
through teams of sector-specific research consultants specializing
in the use of Insight Community and Voice of Market technology.
About TD Bank, America's Most Convenient
Bank®
TD Bank, America's Most Convenient Bank, is one of the 10
largest banks in the U.S., providing more than 9 million customers
with a full range of retail, small business and commercial banking
products and services at more than 1,200 convenient locations
throughout the Northeast, Mid-Atlantic, Metro D.C., the Carolinas
and Florida. In addition, TD Bank
and its subsidiaries offer customized private banking and wealth
management services through TD Wealth®, and vehicle
financing and dealer commercial services through TD Auto Finance.
TD Bank is headquartered in Cherry Hill,
N.J. To learn more, visit www.tdbank.com. Find TD Bank
on Facebook at www.facebook.com/TDBank and on Twitter at
www.twitter.com/TDBank_US.
TD Bank, America's Most Convenient Bank, is a member of TD Bank
Group and a subsidiary of The Toronto-Dominion Bank of Toronto, Canada, a top 10 financial services
company in North America. The
Toronto-Dominion Bank trades on the New
York and Toronto stock
exchanges under the ticker symbol "TD". To learn more, visit
www.td.com.
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SOURCE TD Bank