Understanding the answer to this question lies in tapping the consumers being subjected to it. To rephrase it, we need to understand first that who belongs to this faction of “young adults” and how does their thought process operate.
Who Are These Young Adults?
At present, the group of young adults is entirely composed of the people who have come through the millennial generation. This generation is a demographic cohort between Generation X and Generation Z, having their birth years somewhere between 1980s and early 2000s.
What Are They?
Millennials are looked upon as a generation of people who are highly ambitious and hold themselves in the highest of regard. Being brought up in age of recession and global economic crisis, they understand the need of managing finances correctly to have a better future. They are adaptable to their surroundings and proactive in their decision making.
How Being a Millennial Promotes the Use of Credit Cards
Being ambitious means that millenials tend to part ways towards financial independency more quickly than any other generation. They want to have their own home, own car and want to secure their future by looking for investment alternatives.
In order to achieve all this, they need a healthy credit score and that is where their utilization of credit card comes in. The commodity is a smart way towards building an appreciable credit history, which can then be used to acquire bank loans, rent apartments, get car insurance and invest in a buy-to-let mortgage schemes.
Understanding of the Finances
Millenials are pretty shrewd when it comes to dealing with their financial matters. They know rewards and discounts are a great way towards building their piggy banks and they exploit credit cards to achieve this. These cards have offers like cash back rewards and discounts on regular monthly payments, which young adults or millenials use to add to their savings.
In present age, the cases of thefts and frauds are being reported on regular basis worldwide. Carrying cash or using a debit card often leads to exploitation of the customer by these frauds. This forces the younger adults to be proactive and adapt. They prefer using credit card as compared to debit card and cash, since it offers additional security and buyer protection.
When you make a transaction through a credit card, it does not immediately impact your account balance. It operates on an IOU. So in case of misuse, you can always cancel the IOU and protect yourself from theft and frauds.
And what about debit cards?
Any transaction made through a debit card, instantly affects the balance in your bank account. So in cases of a fraud or theft, you an end up paying heavily and you will have to fight your case to recover your money. Getting back your money seems harder than cancelling an IOU.
But debit cards have a PIN code, no?
Yes they do, but most of the stores use debit cards as credit cards and they don’t even ask for signature for cross checking purpose.
Where the use of credit cards has been exploited for wrong reasons by the previous generations, young adults of today have engineered their use in a much more effective way. Credit cards like every other commodity have their advantages and disadvantages, and it appears as if the forthcoming generations are better equipped for their use.