Millennials are currently facing one of their biggest financial crises: student debt. In a study by Brookings Institute, it’s possible that only 60 percent will be able to pay their loans by 2023. The others will default.

1. Patriot Bank
Millennials Need to Improve
Their Financial Literacy

2. Millennials are currently facing one of their biggest financial crises: student debt. In a study by
Brookings Institute, it’s possible that only 60 percent will be able to pay their loans by 2023. The others
will default.
The student debt, however, is just one of the problems. The other is financial literacy. Many
millennials, for example, don’t know how credit cards work.
Millennials Are Not Signing Up for Credit Cards
In a 2016 survey by Bankrate.com, no more than 33 percent of the Generation Y owned a credit card. It
paled in comparison to the percentage of senior adults who had one, which was at 70 percent. In
hindsight, their reason for not signing up for credit cards is the fear of debt, according to the survey.
In another survey by Credible.com, this group considers such debt as scarier than climate change, war,
or even death. The burden of student loans and the challenges their parents face to repay credit card
debt also contribute to the worry.

3. The Problem with This Decision
However, the deeper reason may be the lack of understanding of the credit card process. In a LendEDU
survey, about 17 percent thought not having a card would not affect their credit score. Another 6
percent, meanwhile, believed it would increase their credit score.
These beliefs are far from the truth. Credit cards are a good way to build a credit history, which, in
turn, can help boost the FICO score. It will then increase their chances of having access to more and
better types of loans, including mortgages.
In an Experian survey, millennial respondents were asked what they thought their average credit score
was. They assumed it was 654 when, in fact, their average score was 625. If the group wanted to
achieve their ideal credit score, they need to work on increasing it – which they cannot do quickly
without a credit card. Experts believe the best credit score is 700.
A credit card debt can easily ruin a person’s finances. It may take as long as three years to repay it, and
as the balance increases, it may lead to either a default or bankruptcy. But the risk of not having one is
also high. What millennials can do is to get credit cards that allow them to control their spending.

4. Resources:
https://bankpatriot.com/
http://money.cnn.com/2017/10/09/pf/millennials-credit-cards/index.html
https://nypost.com/2017/08/05/millennials-dont-know-how-credit-cards-work-survey/
https://www.experian.com/blogs/ask-experian/millennials-and-credit-survey-results/