Even though credit cards have made a significant impact on consumers and businesses in recent decades, entrepreneurs shouldn't put away the cash counters just yet. Some reports indicate young people are hesitant to use plastic for purchases and could be relying on more traditional forms of payment.
Credit card use drops among young people
Younger adults appear to be developing a more cautious approach to spending and their financial futures, meaning they may be more likely to use cash rather than putting purchases on their credit cards. A 2012 survey by Sallie Mae and Ipsos Public Affairs revealed 33 percent of college students carry no credit card balance at all. Of those who do have a balance, the average amount is $755.
However, young adults aren't just using their credit cards less - they're also applying for them less frequently. Data from the survey indicates 35 percent of college undergraduates have a credit card, down significantly from the 42 percent who carried them in a similar 2010 survey.
Why are younger adults hesitant to have access to credit?
Fewer college students and young adults are taking on the responsibility associated with credit cards, and many attribute this to the economic recession that made many individuals hesitant to borrow and may have scared some away from the idea of credit card debt.
While some may be wary of the idea of credit, those who want credit cards may have increasingly difficult times accessing them. According to Bloomberg, the 2009 Credit Card Accountability Responsibility and Disclosure Act made it harder for credit card companies to market their products on university campuses. This could prevent some students from knowing where to turn to obtain credit, limiting the number of students who have these payment options.
What does this mean for retailers?
Because many college students and younger adults lack access to credit cards or are too hesitant to use them and carry a balance, they may make more cash transactions. This makes it especially important for retailers, especially those that serve larger numbers of young people or are located near college areas, to ensure they're ready to serve cash-paying consumers and effectively count their cash drawers at the end of each day. Having the most efficient currency counting machine can better help companies deal with the increasing number of these transactions they may see and ensure their cash room practices are optimized.
April 1, 2013