Millennials are those people whose date of birth is anywhere between 1982 and 2000 (as of now). With most of them being in a money-making age, their spending patterns have a great impact on the nation’s economy. Often the older generation does not think very highly of millennials and judge them for their financial decisions. However, one thing that we must bear in mind is the fact that millennials have to bear the brunt of the Great Recession. It will be fair to say that this generation is the one that is the worst affected.
Today, it has been years since the recession but the effect of it is the fact that it has crippled their earning potential. Naturally, that has taken a toll on their spending habits and financial behavior. In such a scenario, the presence of credit cards has been a major life saviour. Read on to know about millennial spending habits and the effect of credit cards on the same.
- More research before a purchase
Millennials are the most technologically advanced generation and they do a lot of research before making any purchase. Today, any product is available in a virtual platform and easy internet access has ensured that millennials consider all their options before settling on one. The easy availability of credit cards and high spending limits of the same has ensured that money is not a matter of major concern while making a purchase. Today, if a millennial wants something, he ensures that he gets it. The credit card in his pocket is what has made all of it possible.
- Lack of prioritization
Higher credit limits on their credit card mean that millennials have a greater amount of disposable money at hand. This leads them to be prodigal and buy a lot of things that are not necessary. It is the easy availability of credit cards coupled with the lack of prioritization that is leading people to buy things that they will never use.
- A generation of spenders
With the last decade seeing the highest credit card penetration in the country, the millennials have been the generation to adapt to it the quickest. The result has been the fact that the acceptance of the credit card, proliferation of the same has also become a way of life for this generation. A growing number of millennials are seen to be having credit cards from multiple banks and owing thousands of rupees in each of them. The booming of this generation of over-spenders is not healthy for the nation.
- Food and dining out
Millennials are a generation that gives a lot of importance to dining out. Across the globe, one would find most millennials eating out at least once a week. The fact that most credit cards have tie-ups with restaurants and offer exclusive discounts further encourages millennials to indulge in this. A notable number of millennials apply for their first credit card simply to avail discounts in fine dining places. Other than that, with food delivery services like Swiggy, Zomato and Uber Eats becoming popular (and credit cards offering discounts on the same), millennials are spending a considerable amount of their income on this.
- Private travel
Millennials are a generation that does not like to travel by public transport. With things like Uber, Ola and Rapido being available at the click of a button, this becomes their preferred choice. Also, during month-end (or any other time) when the customer runs out of cash, these portals facilitate the payment through a credit card. This works in favour of the millennials who pays off the amount later when he gets his salary and the credit card bill. These days there are several self-drive cars like Voom, Rapido, Drivvezy, and others. Most of these prefer the use of credit card over a debit card and millennials are choosing them over other available options.
Millennials spend a considerable part of their income on smartphones, laptops, iPads and other gadgets. As these are expensive goods, most of the time they do not have the cash in hand to be able to make the purchase. In such cases, they rely on EMI and credit cards. With most banks having tie-ups with gadget companies, customers get a lot of discounts when they purchase their credit cards. This encourages millennials to keep up their winning streak without having to worry about arranging the money immediately.
- The emotional effect of spending habits
Millennials are a generation of people who are easily affected by peer pressure. It is this that causes them to go beyond their means and buy things. Credit cards take off the urgency of payment and allow them to be prodigal. Later when it comes to paying off the credit card bills, most millennials are failing miserably at it. Interests are building up and credit scores are dropping. This often leads millennials to depression, insomnia, and other violent expressions.
As of 2019, the millennials are the financial powerhouse generation. The fact that their purchases and financial decisions are dictated by the plastic credit cards is bound to have a huge impact on the overall economy. As of now, we only have to wait and watch as to how things finally turn out to be.