Millennials love plastic. Plastic as in credit and debit cards, that is. More than their parents, millennials like to pay for things with a card, according to a new poll by CreditCards.com.
When questioned about how they usually pay for purchases under $5, 77 percent of people over age 50 surveyed preferred cash to debit or credit, and just 48 percent of people between 18 and 29 years old use paper money. Since more than half of millennials are using cards to pay for even small expenses, it stands to reason that they are most likely using plastic for most purchases overall.
Millennials use debit cards (37 percent) over credit cards (14 percent) by a larger margin than any other cardholder group, reports Time. This could be a major mistake in the long run.
Most experts say consumers are more likely to spend more when they swipe. According to a 2012 study from The Journal of Consumer Research, shoppers who use plastic concentrate more on the benefits of the purchase than the price of the item. But people who pay with cash think about the price first.
Then think about all the fees, interests, and even overdraft charges that plastic users can rack up. In fact, millennials are more likely than any other age group to overdraw their checking accounts, reports the Consumer Financial Protection Bureau. “About 11 percent of millennials overdraft more than 10 times a year, and these overdrafts were typically for small purchases under $24 and were paid back within three days. With the median overdraft fee equaling $34, borrowing $24 for three days is like taking out a loan with a 17,000 percent annual percentage rate, the study found,” reports Time.
So the next time you go shopping, consider whipping out the cash before swiping your card. Pay it now and be done with it.