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Millennial Credit Card Use Is on the Rise

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Don't be fooled by outdated stereotypes that paint millennials as credit-averse: In fact, millennial credit card usage is on the rise. As this generation's credit scores have grown over the years, so too have their credit card balances, showing this generation isn't afraid to spend on credit.

Some 72% of millennials now have credit cards, according to Experian data from the second quarter (Q2) of 2019. That's up nearly 10 percentage points from five years ago, when only 63% of the generation carried a credit card.

Millennial Credit Scores Continue to Increase

Over the past five years, millennial consumers—those ages 24 to 39—have increased their average FICO® Score by 17 points. This reflects the highest increase of any generation for that time period. Average scores for millennials were at 668 in Q2 2019, a jump from their Q2 2015 score of 651.

Interest rates and approval for credit cards are based heavily on consumers' creditworthiness, and as millennials have grown older, their improved credit scores have helped them obtain more favorable rates and terms on credit cards and loans.

Millennial Credit Card Balances Growing Fastest Among Generations

The uptick in millennials credit use is seen in the growth of their credit card balances over the past five years. Millennial credit card balances have risen 40% since 2015, the most rapid increase of any generation during that period.

In Q2 2019, millennials owed an average of $4,889 in credit card debt—$1,390 more than they owed in 2015. Compared with other generations, millennials' average credit card balance ranks in the middle: third-highest in Q2 2019, following Generation X's average balance of $8,215 and baby boomers' average of $6,949.

Per credit card account, millennials (who carry an average of 3.2 credit cards each) had an average balance of $1,528 in Q2 2019. That's the second-highest per-account balance, bested only by Generation X, who hold an average of 4.3 cards and carried an average balance of $1,910 per card account. Baby boomers had the third-highest per-account average balance of $1,448. And while older generations may still have more credit card debt overall, millennial spending per account could offer an early glimpse into how millennials plan to use credit cards as they age.

Types of Credit Cards for Millennials

Though millennials' average FICO® Score of 668 hovers right below the score range considered "good" (670-739), there are still credit card opportunities within reach. Depending on how old the millennial is, what stage of life they are at and where their credit score stands, they may be eligible for several different types of credit cards.

Millennials whose credit is on the lower side may consider getting an entry-level rewards credit card that allows them to earn benefits as they spend with their card. Cards such as the Capital One® QuicksilverOne® Cash Rewards Credit Card and Credit One Bank® Platinum Rewards Visa are recommended for consumers with a credit score between 580 and 669, and both offer cash back earning opportunities.

Younger millennials just starting their credit journey could consider applying for a secured credit card, which has a lower barrier to entry and is helpful for those looking to improve their credit scores. Secured credit cards require a security deposit (which is often equal to your credit limit) as a method to limit the risk taken on by the credit card companies.

Millennials with longer credit histories and credit scores that are considered good or better could consider applying for slightly more competitive credit cards, like the Chase Sapphire Preferred® Card or the American Express® Gold Card. These cards come with heftier annual fees, but offer valuable reward opportunities that can easily outweigh the yearly fee burden.

How Millennials Can Keep Improving Their Credit Scores

Regardless of what credit score a millennial has right now, it's important to remember that building a strong credit history and score takes time, so it's imperative to begin thinking about credit now. Here are some ways to improve credit:

  • Pay all bills on time. Payment history is the most important aspect of a credit score.
  • Keep credit card balances low. Monitoring how much available credit they use each month is also important, as credit utilization is the second most important aspect in calculating a credit score.
  • Don't apply for too many credit cards at once. Lenders view this is risky financial behavior.

For millennials looking to jumpstart or easily increase their credit scores, Experian Boost is an option that gives credit for on-time utility and telecom payments. Experian Boost can help a consumer raise their FICO® Score instantly, and is a great tool for someone early on in their credit journey.

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