5 Questions with Matt Schulz, senior industry analyst, CreditCards.com
CreditCards.com’s Senior Industry Analyst Matt Schulz has spent much of the last decadehelping people make smart decisions about their money, especially credit cards. A keen observer of the payments and credit card industry, he has been quoted in or had his work appear in major media outlets suchas NBCNews.com, MarketWatch, U.S. News and World Report and HuffPost.
Schulz is also a frequent speaker at industry conferences. Most recently, VantageScore spoke on a panel Schulz moderated at the CardCon and FinCon Expos, where the financial blogosphere congregated to discuss credit cards, consumer credit and personal finance.
1) What are the biggest misconceptions about Millennials and their relationship with credit cards?
The biggest misconception is that they don’t want credit cards. The conventional wisdom has been that Millennials – still struggling to find their footing career-wise and still drowning in student-loan debt – will avoid credit cards because they don’t want the possibility of any more debt.
That’s clearly true for some Millennials, but this generation is not a monolith. The Chase Sapphire Reserve phenomenon, which saw many, many Millennials applying for the card in search of great value and cool experiences, smashed preconceived views of Millennials and credit cards. The truth is that like generations before them, this one is willing to embrace credit cards if they see value in them.
Our data showed that one in four Millennials has credit card debt. Only the Silent Generation is less likely to have card debt. About 36 percent of Gen Xers said they have card debt and 29 percent of Baby Boomers did the same. Those are certainly bigger numbers than you’d find with Millennials, but not that much bigger.
2) All Millennials aren’t alike. What are some of the differences between the younger and older Millennials?
There’s no such thing as a “typical Millennial.” The generation spans roughly from 18 to 36 years old, and the truth is that there’s an enormous amount of difference between those two ages. Very few people are the same person at 18 that they are at 36. By 36, you might have a kid, a mortgage, an established career and more responsibility than you could imagine having when you’re 18.
Those differences show in our data, too. We saw that more than half of younger Millennials blamed “day-to-day expenses” for their credit card debt, while only about a third of older Millennials did the same. Also, more than 60 percent of older Millennials with credit card debt said they had been in debt for more than a year. That number was just above 30 percent for younger Millennials.
3) The credit card industry has been on quite a tear. What’s driving that trend?
People are feeling good about their money and about their job security these days, and when that happens, people spend. That has created enormous competition in the credit card marketplace and an arms race to attract new customers and keep current ones.
Don’t expect the good times to last forever, though. Overall card debt is near record highs at about $1 trillion, interest rates are on the climb and delinquencies are starting to creep up.
4) From an educational standpoint, what’s the best delivery mechanism if a financial institution wants to provide educational materials to younger customers?
Video is huge. From Facebook to Snapchat to YouTube and beyond, younger consumers love, love, love video. However, these videos need to be done well. If you’re producing a 30-minute lecture video and expecting it to resonate with Millennials, you’re almost certainly going to be disappointed. However, if you create a series of shorter clips, creatively done, presented in simple, clear and relatable terms, you just might catch their eyes.
5) What other surprises came out of your research?
When asked about their reasons for being in credit card debt, all age groups blamed “day-to-day expenses,” at least to some degree. However, secondary reasons for debt differed among generations. Baby Boomers and the Silent Generation were more likely to blame medical bills, Gen X was more likely to blame home repairs or big-ticket retail purchases, and Millennials were most likely to blame vacation expenses.
That fact is just further proof that there’s no such thing as a typical Millennial. You clearly have a segment of Millennials who are using credit cards simply to get by as they struggle with student loan debt and their young careers. However, you also have a group that is using cards to have memorable experiences. These could be Millennials who have gotten their footing career-wise but might not have kids or a mortgage yet and are devoting that time of their lives to seeing the country or the world. Both of those subsets are Millennials, but their lives likely couldn’t be much more different.