Americans are generally happy with their credit cards. The one group that is something of an outlier is adults aged 18 to 24.
A CardRatings.com credit card satisfaction survey found that this age group had a clearly lower level of satisfaction with credit cards than any other group. The answer may be partly a matter of what credit cards have to offer young adults, and partly a function of young adult financial behavior.
Age and credit card satisfaction
The survey asked over 1,600 adults about their experiences with credit cards. Overall, 84.4% said they were “satisfied” or “very satisfied” with their credit cards.
Even the least-satisfied age group seems reasonably happy with their credit cards, with 77.8% of young adults aged 18 to 24 saying they were “satisfied” or “very satisfied” with their credit cards.
However, this percentage is not only clearly lower than the overall average of 84.4%, but it is the lowest satisfaction level of the six age groups surveyed. Satisfaction levels for the other five age groups ranged from 82.2% to 88.9%.
Why are young adults dissatisfied with credit cards?
So why do young adults stand out as being less satisfied with their credit cards than other age groups? Some of the likely reasons are discussed below.
Young adult financial behavior shows steep learning curve for credit
The 18 to 24 age group generally consists of young adults who are using credit for the first time. That learning experience isn’t always a pleasant one.
For example, late last year an H&R Block survey found that Gen Z felt more burdened with credit card debt than any other age group. While members of Gen Z are less likely to have credit card debt than other adults, in the H&R Block survey those who did have credit card debt were least likely to describe that debt as manageable.
This feeling of being overwhelmed isn’t their imagination. The New York Fed’s Quarterly Report on Household Debt and Credit found that young adults are falling seriously behind on their credit card payments faster than any other age group. Over the most recent 12 months, 10.4% of young adults had fallen 90 days behind on their credit card payments, compared with 7.1% for the general population.
This is a natural function of inexperience with using credit. From figuring out how to use credit cards within a budget to developing habits to keep payments on time, there’s a learning curve involved. As the age group at the earliest point of this learning curve, it’s no surprise that young adults struggle with it the most.
Overdue payments lead to bill collection hassles and late fees. It’s no wonder these experiences make young adults less satisfied with their credit cards than those age groups that know the routine a little better.
Learning to choose the right credit card can take time
Another factor in credit card satisfaction is choosing the right card for your needs.
Key considerations in choosing a credit card include:
- Annual fees
- Interest rates
- Type and size of rewards
- Other perks, such as exclusive offers and access to airport lounges
Not only does this give new credit card users a lot to think about, but the best choice depends on how you use the card. For example, if you pay off your balance in full every month, the interest rate matters less to you than someone who regularly carries a balance. A person who travels a lot may prefer a travel rewards card, whereas another customer might get more use out of cash back rewards.
Choosing the right card requires getting to know both the different features of credit cards and how you tend to use your cards. This can take time, so it’s understandable that first-time users might be less likely to make the best choice.
➤ SEE MORE:How to choose your first credit card
Better credit often means better credit card choices
Another reason the 18-to-24-year-old group may be less satisfied with their credit cards is they don’t generally get the best offers.
People with excellent credit scores are more likely to qualify for the best credit card offers. This means the best interest rates, lowest fees and most generous rewards.
Of course, young adults often have limited credit records. They also sometimes struggle with credit use initially, which can hurt their credit scores. So, in general, they are less likely to qualify for the best terms. It’s understandable why that would lead to less satisfaction with their credit cards.
➤ SEE MORE:Best first credit cards
Getting better results from your credit card
For the reasons discussed above, if you’re a young adult you have some disadvantages as a credit card user. However, there are some things you can do to increase your chances of having positive experiences with credit:
- Choose based on how you’ll use the card. Things like how much you use a credit card, what kinds of things you buy, the size of the balances you carry and whether your payments are on time make a difference to what credit card terms are the best for your needs. Think ahead about how things like interest rates, fees and rewards will affect you.
- Plan to make every payment on time. Work out a system. Whether it’s automated payments or calendar reminders or something else, making payments on time consistently is essential to using credit successfully.
- Pay off as much of your balance as possible every month. Your credit card bill will show you a minimum payment that you should find pretty easy to afford. However, if you pay only the minimum, you’ll carry a balance for longer and pay more interest. Always pay more than the minimum, and if possible pay off your balance in full every month. That will help you minimize interest charges.
- Don’t let rewards go to waste. Earning rewards is nice, but remember that those points often expire after a while. Letting credit card points expire is like leaving money on the table. Here’s a key tip: you can generally use those points for statement credit to help pay your credit card bills.
Using credit for the first time is a learning experience. Thinking ahead about what you want to get out of your credit card will help make it a positive experience.
➤ SEE MORE:A new generation must learn responsible credit habits
