Millennials, Debt and Credit Statistics
It’s pretty easy to make jokes about the tough spot faced by educated millennials in the current economic climate. Just take a look at The Onion’s sage advice for those embarking on college tours in advance of the coming fall semester:
Be sure to check out the local bars and restaurants to find out the best places to get a job when you graduate.
Not to besmirch the quality humour dished out on a regular basis over at the Onion, but there’s an unfortunate kernel of truth in that statement. (Wait. Did I just mix vegetable metaphors?)
Millennials, also known as “generation Y” or more accurately those of us born between approximately 1982 and 2004 – such as your blogger – have been the subject of a great deal of journalistic discussion. Think pieces about the demographic have exploded in popularity, many built on the observation that its members have undertaken undergraduate or graduate-level education only to be cast adrift into one of the most discouraging job markets in recent memory. The corollary to this problem is that students end up racking up large quantities of debt in the process, thus derailing their personal and professional development.
The negative social implications of this situation include the fact that many would accuse an entire demographic of being lazy or “coasting,” or simply being unable to pull up their bootstraps and get to work. However, millennials may be more savvy than you think with their management of personal debt, even in a climate where the majority of rhetoric aimed at our demographic comments on debt aversion or even “terror” and a general pattern of flight from services like credit cards.
A recent TransUnion report notes that while average balances per Canadian consumer have risen 2.3% over the past year, Gen Y borrowers are not as risky as some may believe. TransUnion data show that Gen Y borrowers had a 90-day or worse credit card delinquency rate of 2.76% at the end of 2014, actually 10 basis points lower than the 2.86% rate for Gen X (those born between 1965 and 1979).
Millennials’ credit limits compared to those of their Gen X forebears are smaller by almost half. Obtaining credit and using it responsibly is one of the cornerstones by which a solid credit profile begins to be built. A public rhetoric based on fear and avoidance of credit will probably do less to help millennial financial planning than one based in education and responsible use of such products in order to achieve greater debt stability.