Credit use by generation: Who's doing the best job?


 Credit use by generation: Who's doing a better job? Juan Rodriguez/


 Credit use by generation: Who's doing a better job? Juan Rodriguez/


The generation you’re from likely plays a big role in how you view the world, and that includes your money and credit management style.

“The generation you’re born into sort of dictates your behavior patterns,” says Jim McCarthy, a certified financial planner and managing director at Directional Wealth Management. If you grew up during the Great Depression, for instance, you’re most likely someone who learned how to live frugally.

Research by the credit bureau Experian in reveals clear delineations between how each generation is using credit.

  Millennials (Generation Y), ages 19-34
Generation X, ages 35-49
Boomers and older, ages 50+
Average credit score 625 650 709
Credit card balances $3,403 $6,752 $5,603
Credit card utilization 43% 41% 25%
Source: Experian, representative sample of its database of credit reports. Credit score is VantageScore.

In terms of credit scores, millennials (ages 19-34) had the lowest average scores, with Boomers and those older than them (ages 50-plus) had the best, with Generation X in the middle. That's as you might expect, since length of credit history and practical experience managing credit products contribute quite a bit to the credit score formulas.

Generation X (ages 35-49) carries the most credit card debt, with an average $6,752 balance and 41 percent utilization rate (the amount of available credit being used). By comparison, millennials only have an average $3,403 balance, but since they have less available credit, that figure represents a 43 percent utilization rate.

Faring the best utilization-wise are the 50-plus crowd, who use just 25 percent of their credit lines. However, they’re still carrying a fair amount of debt, with an average balance of $5,603 on their credit cards. Experian based its findings on a sampling of the credit bureau's massive database of consumer credit records, and published in July 2015.

Boomers are now getting old, getting ill, and having to manage their aging parents, which consequently, means unexpected expenses. The party is over.

— Ann Fishman
Generational expert and author

Of course, stats don’t necessarily tell the whole story. By taking a closer look at the motivations, credit habits and financial philosophies of baby boomers, Gen Xers and millennials, there is something to be learned from each.

Baby BoomersBaby boomers grew up during an era when jobs were plentiful, and there was a clear path toward advancement, says Ann Fishman, generational expert and author of “Marketing to the Millennial Woman.” “It was economically a wonderful age. But this generation set up a pattern of spending I refer to as the ‘democratization of luxury,’” she says. In other words, boomers (unlike the Greatest Generation that came before them) developed a sense of entitlement to have certain things.

McCarthy, who is a boomer, says that is an accurate portrayal. “When I was in my 20s and 30s and on an accelerated career track, it was almost a badge of honor to be able to say you had $100,000 of revolving credit available,” he says.

Remember, says Fishman, this is the generation that really fueled the growth of the credit card industry – before them, there was only the Diners Club card.

How they use credit: To fund their bucket list. Before the boomers, the bucket list wasn’t even a concept, says Fishman, but this generation’s desire to achieve status through spending is why some of them are not able to retire today.

In fact, older generations are increasingly carrying debt into retirement, including 80 percent of baby boomers, according to the Pew Charitable Trust report, “The Complex Story of American Debt.”

Luckily, their steady jobs over the years – many of which came with pensions – and a favorable housing market during their young adult years have helped them power through. But they’re not out of the woods just yet. “Boomers are now getting old, getting ill, and having to manage their aging parents, which consequently, means unexpected expenses. The party is over,” says Fishman.

What they’re doing right: Over the past few years, McCarthy says boomers have reined in the cavalier attitude they once had mostly because of the financial crisis of 2008-2009. “The impact it had on employment and retirement savings created a shift in attitude as boomers have gotten older and had to stare at the reality of postponing retirement,” he says.

That’s why they are working so hard to reduce their debt and live more frugally now, says McCarthy.

Tips for boomers:

  • Keep pulling those free credit reports three times a year, one from each credit bureau (via, to keep tabs on your credit file, even if your days of using lending products are winding down, says McCarthy.
  • Be wary about co-signing loans for your children or grandchildren. If you have the financial wherewithal, you’re better off lending money to relatives on a personal basis, says McCarthy. As a co-signer, if the borrower doesn’t pay, your credit reputation and finances are on the hook. A June 2016 poll by found that almost 4 in 10 co-signers have to repay some or all the loan from co-signed loans gone wrong.

Generation X
Gen X Society has overlooked this unlucky generation wedged between boomers and millennials, says Fishman. “Gen X were the children of divorce in large numbers. They have families they have to take care of, a weak job market, and parents who have never really supported them much financially,” says Fishman. Add to that the fact that many bought homes only to lose value during the recession, and this group hasn’t caught much in the way of an economic break.

In fact, one in five people in this group believe that going into credit card debt to handle day-to-day purchases is “just a fact of life,” according to the 2015 Allianz Generations Apart Study, which surveyed of 2,000 U.S. adults.

[Millennials] have focused on being responsible with money, spending within their means, and shunning items that need to be financed.

— Julie Pukas
TD Bank 

How they use credit: As a survival tool. Gen Xers definitely see credit cards as a lifeline. The Allianz study shows that Gen Xers carry 82 percent more non-mortgage debt (student loans and credit cards) than boomers. And in the Experian data, Gen Xers had the most credit card debt of any other group in the nation. However, it’s not because they have an affinity for fur coats or trips to Paris, says Fishman. “They tend to be practical, trying to raise families or do things for their kids, and so they have to rely from time to time on credit cards,” she says.

What they’re doing right: Despite the fact that they struggle with revolving balances, Gen Xers are savvy and keep their fingers on the pulse of what’s happening to find the best deals, says Fishman. Even in hard times, they’ve shown they are financial survivors who can make sacrifices when they need to, she adds.

Tips for Gen Xers:

  • Those struggling with debt should work with a financial adviser to find ways to cut expenses in order to free up more cash flow, says McCarthy.
  • All generations, especially those crippled by high interest debt, can benefit from following a clear debt reduction strategy. Two ideas: Put all of your extra money toward tackling the account with the highest interest while paying just the minimums on the other accounts. Or, knock out the smallest balance first and work your way up to achieve quick victories along the way.

Gen YThis youngest group, sometimes called Generation Y, grew up watching their parents flounder financially and came of age during the recession. “A lot of them are suffering with the sticker shock of college debt, as well as seeing their parents struggle,” says McCarthy. As such, they are debt averse, and aren’t so quick to sign up for credit cards.

How they use credit: Sparingly at first, then ravenously. Young millennials aren’t very keen on credit cards. A June 2016 study by FICO found that among young millennials, ages 18-24, just 67 percent use credit cards – the smallest percentage of any adult age group. That flips around for older millennials, ages 25-34. More than 4 in 5 (83 percent) use credit cards, the highest percentage of any adult age group. Older millennials are also the most likely to have more than three cards, and to be seeking another in the next six months.

The TD Bank Consumer Spending Index released in May 2016 found millennials overall charge 22 percent less than the average consumer. “Millennials prefer to use cash or debit for discretionary purchases, and choose not to leverage a credit card as a payment option,” says Julie Pukas, head of TD Bank's U.S. bank card and merchant solutions.

What they’re doing right: “While people love to say bad things about millennials, they are quite savvy when it comes to money,” says Fishman. For instance, they shop at discount retailers and consignment stores, and they’re the ones who really created the sharing economy.

Tips for millennials:

  • The major negative with this group, and the reason they have the lowest credit scores, is that they are waiting too long to get started with credit products. “Where this issue becomes significant is when these consumers want to make a larger purchase that requires financing – like a car or a home,” says Pukas. Their lack of a credit profile and poor credit score can lead to higher interest rates or difficulty in getting approved for new lines of credit.
  • While it’s wise to use credit with caution, opening one card when you turn 21 – even if it’s a secured product backed by a deposit – is vital for building that all-important credit history. The key is to use it, but pay your bill on time every month, and never carry a large balance.

No matter when you were born, it’s never too late to develop smart credit habits. “It is possible to step out of your generation and learn something,” says Fishman. “We are products of the events that happen during our formative years, but it doesn’t mean that you can’t try something new.

See related: Millennials most likely to fall prey to scams, Infographic: How generations view financially making it

Published: July 1, 2016

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Updated: 10-22-2016

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