Survey: How Millennial Credit Card Habits Are Costing Them

A lack of knowledge about credit can lead to lower scores
A woman enters her credit card into her computer.

Having grown up in a digital world, millennials are the generation that is least likely to carry cash. But a new survey suggests that some of their credit card habits may lead to financial trouble in the future.

TD Bank's Consumer Spending Index found that many millennials are engaging in behaviors that can have far-reaching negative consequences. Among the findings:

  • Half of millennials use more than 30 percent of their credit limit
  • 32% don’t pay their card balances in full each month
  • 25% don’t know their credit scores
  • 23% don’t have a credit card

These behaviors can negatively affect their credit scores. For example, the amount of debt that you carry relative to your credit limit counts toward 30% of your FICO credit score. The more debt you carry from month to month, the more your score can be negatively impacted. VantageScore, another credit scoring model, recommends that consumers use no more than 30% of the credit line they have available.

Plus, carrying a credit card balance from month to month can get expensive as interest compounds on high-APR cards, making it more difficult to delete debt if a card balance grows unchecked. Not paying a balance in full monthly not only deletes any value from card rewards programs as interest accrues, but can also lead to serious financial consequences

The fact that one-quarter of millennials don’t know their credit scores is also problematic. If you don’t know your score, you have no idea whether you are engaging in financial behaviors that might impact your ability to qualify for a loan when you need one. Not only that, but your credit score may be adversely impacted by mistakes on your credit report. One study by the Federal Trade Commission found that as many as 20% of credit reports contained errors.

Not having a credit card could also have a negative effect in some cases. Length of credit history counts toward 15% of your FICO credit score. For many young people, a credit card is one of the first types of credit accounts they get to start building a positive credit file. A credit card account can jumpstart your credit history even if you rarely use the card.

Mike Kinane, head of US Bankcard at TD Bank says that the data suggests that millennials aren’t as knowledgeable about credit as they should be. "The data is a bit concerning – it shows that a significant knowledge gap exists for millennials when it comes to credit, especially compared to prior generations," Kinane said.

The TD Bank study also noted one behavior that might not hurt millennials’ credit so much, but could hurt their bottom lines. Millennials are more likely to let their credit card rewards expire without using them. According to the study, 30% of millennials have let rewards expire compared to 14% of Generation X and 9% of baby boomers. This finding is particularly notable considering the fact that millennials spend more with their credit cards on dining than other generations. The money earned in rewards could help offset some of those costs.

One of the keys to maximizing credit is having an understanding of the factors that contribute to your credit score. It’s also imperative to know your credit score. Many credit card issuers and banks give you free access to your credit score so you can monitor it. You should also get a copy of your credit report from each of the three credit bureaus -- Experian, TransUnion and Equifax -- at least once a year. You can do so by going to If you note any mistakes, contact the credit bureau to get the mistakes corrected.

Tamara E. Holmes

Tamara E. Holmes is a Washington, DC-based writer who covers personal finance, entrepreneurship and careers.

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