Why Millennials Avoid Credit Cards and Bank Accounts
Millennials spend, store and save their money differently than members of other generations. The world is transforming to a cashless society, but that is not the only factor that is pushing Millennials away from traditional banking.
A huge factor with their credit card applications being declined is that Millennials seem to be applying for credit cards for which they cannot qualify. This is often due to a lack of credit history or low credit scores. Less than half of Millennials have credit scores high enough to qualify for the cards they desire. ID Analytics revealed that Millennials apply for credit cards at a higher rate (35%) than Generation Xers (29%) or Baby Boomers (28%).
While Millennials appear to be interested in credit cards, even if they do not have the credit history to be approved, the same cannot be said for bank accounts. A survey from Wall & Broadcast found many members of this generation remain unbanked because of high fees they simply cannot afford. Approximately 25 million Millennials and low-income Generation Xers are unbanked (68% of total unbanked Americans), and many of them are forced to leave their banks because they cannot cover the fees.
Overdraft fees were particularly devastating for Millennials. The report showed most overdraft fees were associated with transactions of $24 or less. With an average overdraft fee of $35, young Americans are paying more in fees than they are for their actual purchases. Most overdrafts are repaid within three days, which may suggest that banks should be more lenient about the way they handle insufficient funds.