A few weeks back, we mentioned some conflicting reports on young adults and their use of credit. On the one hand, they were getting deeper in debt — due to sluggish job prospects and increased school costs, among other things. On the other, they were generally preferring to use debit cards, instead of credit cards, to pay for things where plastic was required, to avoid piling up even more debt.
Now comes another study bearing out the latter trend. A Sallie Mae/Ipsos Public Affairs Survey hitting the news circuits this week found that an increasing number of young adults are hesitant to apply for, and use, credit cards. Although 39% of undergrads own and use credit cards now, that’s down from a 49% number just two years ago. Their balances are smaller, too.
A Chicago Tribune article on the study declares that “the trend, rooted in stricter lending rules and weaker job outlooks for young Americans since the 2008-09 recession, has implications for the strength of the economy.” In other words, there is admittedly a house of cards/shell game aspect to the economy — choose your metaphor: Someone has to keep buying large ticket items, or getting credit to buy them, as older workers muster out of the market, retire, cease needing to buy new cars or homes, etc.
Never mind the theoretical tax base that needs to be generated so that there’s an infrastructure for all this commerce.
The article then quotes a mortgage industry consultant, who says, of the non-credit building youth that “you could say that they’re not going to get mortgages, and that could have dire economic consequences. But that assumes a static model. I think that the industry will respond.”
The industry, of course, will have no choice, if a generation of workers and consumers eschews credit to a greater degree than their elders. This is the same generation which prefers having a smartphone to having a car, if they had to choose, so it’s possible that even their view of which “big ticket” items are necessary for a happy life, will be different than their predecessors, driving further changes in infrastructure and markets.
As we noted in the previous article, you have to stay flexible — and be responsive — in addressing your customers’ changing needs, as they shift their own spending preferences due to economic factors, etc. If you take credit cards, you doubtless take debit cards, too, but you might also want to make sure you offer a “cash”-like option and accept electronic checks, too. Gift and loyalty cards can be a way to retain customers, regardless of their preferences in how to pay.
Contact us today to make sure you’re meeting your customers whenever, and however, they’re willing to spend — their demographics notwithstanding.