What’s in millennials’ wallets? Fewer credit cards


Ringed by the posh shops of Beverly Center, Tim Ratliff said no — he didn’t have a credit card. He didn’t need one.

“I just hear so many horror stories about people being in debt,” said Ratliff, 21, who studies psychology at Ohio State University. “When you have a credit card, you feel like you have a lot of money when you don’t.”

Ratliff is like many young adults, emerging data show. His generation, dubbed millennials by academics and marketers, grew up during the boom and bust cycles of the U.S. economy over the last decade and a half — crises that appear to have reshaped their attitudes toward spending and debt.


Millennials, who range from teenagers to people in their early 30s, are more financially cautious than the stereotype of the spendthrift twentysomething, several studies suggest. Many embrace thrift.

Some experts say their habits echo those of another generation, those who came of age during the Great Depression and forged lifelong habits of scrimping and saving — along with a suspicion of financial risk.

“Both generations had a childhood memory of wealth and then saw that wealth yanked out from under them” in or around their teenage years, said Morley Winograd, who has co-written several books on the millennial generation. Though the pain was much more severe during the Depression, “Both generations are very conservative spenders,” Winograd said.

During the economic downturn, while older households ran up credit card debt, younger households whittled it down, a Pew Research Center analysis of federal data found earlier this year.

More young households had no credit card debt in 2010 than was the case in 2001, the data show. Among those who did owe on their credit cards, the median amount fell from roughly $2,500 to less than $1,700.

Maria Garcia, 30, said she gave up her credit card seven years ago. “The fees — they get you,” said Garcia, a mother studying Web development at Los Angeles Harbor College. Her attitude these days is, “If I can do without it, I’ll do without it.”


Other studies hint that Garcia is not alone in that attitude: Young adults were less likely to report using a credit card for everyday expenses than the average adult, a National Foundation for Credit Counseling survey found. Another survey from the Corporate Executive Board, a business advisory company, found that millennials with credit card debt feel worse about it than older adults do.

“They’re keenly aware that the decisions made by their parents, politically and economically, have put them behind the eight ball,” said Michael D’Antonio, co-author of “Spend Shift,” which draws upon an international opinion survey about values and spending. “This is the screwed generation — and I think they know it.”

Many young adults have forgone big purchases. Millennials buy fewer cars and own fewer homes, federal data show.

They cook from scratch more often than older adults, are more likely to try homemade beauty treatments, and are more apt to use coupons to find deals, the market research firm Information Resources Inc. found in a survey last year.

In recent years, Bureau of Labor Statistics data reveal, young adults between the ages of 25 and 34 spent less annually on entertainment than those ages 65 to 74.

Even as they cut back on spending, millennials started saving for retirement earlier than older generations, according to studies by Merrill Edge, Fidelity and TD Ameritrade Holding Corp.


“It’s not that we’re more pious about saving money,” said Nona Willis Aronowitz, a 28-year-old Pipeline fellow with the progressive Roosevelt Institute who writes about generational issues. “It’s more that we have no idea what the future looks like. We’re not sure if we’ll have our jobs in six months.”

Aronowitz added that many millennials who went to college also are burdened by ballooning student loans, making them loath to load up more debt.

Yet despite their thinned wallets, young adults were more likely than any other group — including households making $90,000 or more — to say they were happy with their standard of living, a Gallup survey found two years ago. In another Gallup survey last month, they were more likely than adults ages 30 to 64 to say that their financial situation was good or excellent — which nearly half of them asserted.

In some quarters, thrift has become cool, reflected in the do-it-yourself stylings of Los Angeles hipsters and economical new apps and websites.

“As a kid, if you had a patch on your jeans it wasn’t cool — people made fun of me,” said Jonaya Kemper, a 27-year-old preschool teacher who grows her own vegetables and sews her own sundresses. “Now they ask, ‘Can you teach me?’”

On a recent Monday night, Kemper was learning to adjust brakes at the Bicycle Kitchen, a Silver Lake nonprofit group that tends to battered bikes with spare parts and elbow grease. Across the room, a friendly, tattooed volunteer showed a 13-year-old and her mother how to shorten the chain on a long-neglected bicycle. Kemper was fixing up a bike handed off to her by a friend.


“Paying $600 or $700 for a bike — it’s ridiculous,” Kemper said. As for repairs, “If I can’t fix it myself, I won’t own it. I don’t own a car. I would want to know how to fix it myself.”

The Internet has provided more ways to save. Carless millennials can grab rides with Lyft, a ridesharing service known for its discount rates and the cheeky pink mustaches gracing its cars. Those short on cash can pick up a camping tent or a blender by logging onto NeighborGoods, a Los Angeles-based start-up that helps people borrow items from neighbors and friends.

“The recession made thrift cool,” said Micki Krimmel, the 35-year-old founder and chief executive of NeighborGoods, which has nearly 30,000 members of all ages.

In Echo Park, twenty- and thirtysomethings flock to classes to craft chandeliers out of Mason jars or salvage old clothes with a bit of sewing at the Classroom LA. They fork over upward of $150 to learn to make garden benches, wooden spoons or electric ukuleles at Knowhow Shop, a Highland Park warehouse equipped with saws and a computerized mill.

As the price of such classes underscores, young adults are still willing to spend, but they think carefully about value before buying, marketing groups say. At the grocery store, they give generic brands a chance but will also pay more for organic or local foods, the Hartman Group consumer trends consultancy found.

“They’re looking for, ‘What’s the best investment for the dollar I have?’” said Tina Wells, CEO and founder of Buzz Marketing Group, which studies millennials.


Experts caution that many in this generation may not be thrifty by choice. Nearly 1 in 4 young adults surveyed by the National Foundation for Credit Counseling said they had applied for a credit card in the previous year; more than half as many were rejected. Fewer college students reported owning credit cards at all after a federal law made it tougher to issue them to consumers under 21, Sallie Mae and Ipsos found.

Others warn debt could still be trouble for strapped millennials. An earlier Ohio State University study that included roughly 300 young adults projected that while they owed less on credit cards, they repaid it so slowly that they could face far deeper debt than their parents and grandparents in the future.

Ratliff is wary of that risk. Maybe a credit card is in his future. But the Ohio State student sees using one as “a last resort kind of thing.”

“I don’t want to put myself in a situation of being crushed,” he said.