Half of Millennials Are Spending Above Their Recommended Credit Limit

Half of Millennials Are Spending Above Their Recommended Credit Limit

March 12, 2019         Written By John H. Oldshue

Millennials have lower average credit scores than older generations, and a new study reveals certain spending habits that could be major factors. Research from TD Bank shows 32% of Millennials don’t pay their credit cards in full every month, and 25% don’t know their credit scores.

One of the biggest factors that influence credit scores is debt utilization. This is the portion of available credit that a person uses. For instance, if you have $10,000 in available credit and owe $4,000, you debt utilization is 40%. This ratio should stay below 30% to maximize your credit score.

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The TD Bank study reveals half of Millennials use between 31% and 90% of their available credit. Since this is above the recommended amount, it is likely to damage their credit scores.

Millennials are more likely than any other generation to use credit card rewards to pay for a group outing. However, 30% of Millennials have let their rewards expire, compared to 14% of Gen X and 9% of Baby Boomers. A separate study from Wells Fargo shows 48% of Millennials are willing to pay for meals if they can earn rewards, and 64% consider shared rewards as a “perk” of being in a relationship.

Even though Millennials do not always make the best credit decisions, they are the generation most likely to help their children establish credit. The survey found 40% said they would help their children secure student loans, and 45% said they’d help establish credit with a secured credit card. By comparison, 70% of Baby Boomers said they will not help their children establish credit.

The information contained within this article was accurate as of March 12, 2019. For up-to-date information on any of the terms, cards or offers mentioned above, visit the issuer's website. Many of the offers on this article are from our affiliate partners, and LowCards.com may be compensated if you take action with any of our affiliate partners.

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About John H. Oldshue

John Oldshue is the creator of LowCards.com. He worked for over 15 years in television and won an Emmy award for his reporting. He covers credit card rate issues for LowCards.com.