Nov 19, 20183 min read

US Millennials and the New Frontier of Financing.


The millennial generation of 18-34 year-old shoppers doesn’t buy the need for credit cards like previous generations. And it could be hurting retailers at checkout.

Imagine you graduated from college during the worst financial crisis in modern history, you’re still paying off your student loan, and you make less than your parents did at your age. Does the idea of being locked into a credit card—filled with fine print, interest rates and fees—sound enticing? Current research indicates that more and more millennials don’t think so.

However, the prospect of credit is still a very important part of making life’s larger purchases. And millennials recognize that they still need financing.

This up-and-coming generation of shoppers are soon to be the largest consumer group, and are crucial to retailers’ future success. So how do you fill that void? Let’s explore what influenced the change in millennial spending habits, and how retailers can adapt to this new frontier of financing.

Why are millennials avoiding credit cards?

There are a number of factors that led us to this point. The US financial crisis of 2008 created a certain amount of distrust toward traditional banks and financial institutions amongst millennials.

Lack of trust combined with new laws and restrictions, such as Credit Card Accountability, Responsibility and Disclosure Act of 2009, or CARD Act, made it difficult for young adults to acquire credit cards.

The other major influence was the evolution of mobile technology and the rise of virtual payments. Services like Venmo and Paypal have allowed millennials more control over their finances than ever before, which has given them a different perception of payment solutions.

They’re looking for a credit system that fits their needs and purchasing habits. They want financing, but they want it on their own terms—without the fine print.

Control and transparency are crucial for this age group, and often times, credit cards don’t cut it.

The data supports this trend.

As you can see from the graph, credit card ownership among millennials is significantly lower than other age groups. And according to a 2016 Bankrate Study, an incredible 67% of 18-29 year-olds indicated that they don’t own a single credit card.

So what does this mean for the future of retail?

As millennials get older, and their need to purchase big ticket items grows, these financially cautious, tech savvy shoppers will look for new ways to pay.

For some, their aversion to debt will cause them to go down the route of saving over time to get the things they want. However, this isn’t very practical for many. Whether it’s a new home or a new baby; substantial, unexpected costs are bound to happen—expenses that you simply cannot pay for on the spot. That’s why having access to credit is so important.

For the most part, millennials understand the need for financing and are still looking to pay over time, but not in the traditional sense. Retailers that understand the millennial mindset and offer point-of-sale, instant financing at checkout will reap the benefits of higher conversion rates, larger average order sizes, and satisfied customers that will come back again.

Interested in adding instant financing to your online checkout and how it can drive your conversion? Learn more