One in four millennials resort to credit cards to make ends meet - and 60% don't pay off their bill each month
- 25% of those under 25 years-old are borrowing to pay their utility bills
- 16% resort to a credit card to pay their rent
- 25% missed the required monthly minimum payments in the past year
One in four millennials resort to credit cards to make ends meet, according to new research by comparison site TotallyMoney.com.
A quarter of those under 25 years-old are borrowing to pay their utility bills and 16 per cent resort to a credit card to pay their rent.
More than half (52 per cent) admit to using plastic to pay for their groceries. Despite their dependence on credit, 60 per cent don’t pay off their credit card bill each month.
Debts: A quarter of those under 25 years-old are borrowing to pay their utility bills
And as many as 25 per cent admit to missing the required monthly minimum payments in the past year.
Skipping payments incurs expensive penalty fees and leaves a mark on your credit file. This can make you less attractive to lenders considering an application for a mortgage, loan or credit card in the future.
As a result, one in five (17 per cent) have been rejected when applying to borrow in the past 12 months, outstripping the rejection figures for all other age groups.
Therefore just over one in ten are concerned they could be rejected for future applications, many avoid shopping round for a better deal.
In addition to everyday essentials, the study conducted of 2,000 adults by the price comparison site revealed that generation rent are guilty of relying on credit to cover the costs of socialising.
A quarter of young people borrow to pay for nights out and more than a third (35 per cent) cover their bill in restaurants in the same way.
Despite their appetite for spending, figures show this age group are in the dark when it comes to the cost of using a credit card.
More than half are unaware what the Annual Percentage Rate on their credit card, while a whopping 46 per cent do not know what the costs of withdrawing cash at an ATM or spending beyond their limit are.
Figures also revealed that 34 per cent don’t know what the current balance on their account is.
Alastair Douglas, CEO of TotallyMoney.com, said: ‘Millennials shouldn’t be blamed for not understanding credit cards, and more needs to be done to help them avoid costly mistakes.
'Missed payments and failure to pay their credit card bill in full each month indicate a lack of personal finance confidence. And that could cost them dear in the future.
'If we help this generation of borrowers understand the value of using credit responsibly, they’ll be able to establish the kind of habits that will help them to build better credit eligibility scores. Even something as simple as demystifying minimum payments can help people avoid nasty surprises.'
Representative example: If you spend £200 at a purchase interest rate of 18.9% p.a. (variable) your representative rate will be 18.9% APR (variable). Credit limits and terms may vary based on your individual circumstances. Balance transfer offers and introductory fees limited to transfer made with 60/90 days of account opening. See product specific T&Cs.;
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