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Credit Cards: The New Sweatpants With Elastic Bottoms

A Snarketing post by Ron Shevlin, Director of Research at Cornerstone Advisors

I have six pairs of sweatpants in my closet. Five of them have elastic at the bottom of the legs. I’m not allowed to wear any of those five pairs.

My daughters — the fashionistas — have informed me that sweatpants with elastic at the bottom of the legs are VERY uncool. So uncool, that not only would they not be caught dead wearing them, I’m not allowed to wear them, either. And not just out in public, but around the house, as well.

I can’t help but wonder if credit cards have become the new sweatpants with elastic bottoms. That is, something so uncool, the younger generation wants nothing to do with it.

For the past few years, I chalked up the low usage of credit cards among Gen Yers to the combination of a weak economy and where Gen Yers’ less-than-stellar credit scores.

But now I’m not so sure. Just as Gen Yers are the first generation to not automatically use a checking account as their primary financial account, getting a credit card might not be an automatic rite of passage for them, either.

It’s not enough for card issuers to find Gen Y prospects who are good candidates for a credit card. Card marketers have to make it cool to own one.

This might be one reason why Amex is doing what it’s doing with Twitter. I mean, c’mon, how much purchase volume could it really be driving with its Twitter promotion? But as a mechanism for improving the image of the brand (and credit cards, in general), well, that’s another story. (Thx @seansposito)

Putting a picture of one’s dog (as a way of personalization) on the card doesn’t cut it. That just draws the interest of someone already inclined to get a card.

If they don’t, credit cards could become the sweatpants sitting in the closet because it’s too uncool to use them.

Ron ShevlinRon Shevlin is Director of Research at Cornerstone Advisors. Get a copy of his best-selling book, Smarter Bank: Why Money Management is More Important Than Money Movement. And don't forget to follow him on Twitter at @rshevlin.

All content © 2017 by The Financial Brand and may not be reproduced by any means without permission.

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  1. As an outsider who has experienced the USA only as a visitor, I’ve found it impossible to survive for long in the US without a credit card. Not because banks (issuers) kept forcing them on me but because car rentals and a few other merchants made it mandatory to have one. Therefore, I’m not sure how GenY can totally avoid credit cards. Of course, they could use mobile wallets as a way of avoiding the public display of plastic but, unless I’m missing something big here, they’d still have to accept credit, statements, rewards and other realities of credit cards.

  2. I’m Gen-Yer, and I feel like I’ve been taught to be afraid of credit cards. Always heard about how credit card debt ruins people and had a part in ruining the economy.

  3. Ron, you’re clearly on the right track. Banks lack of understanding about consumers who want to control their own financial destinies instead of subjecting themselves to the tyranny of the banking industry is manifesting itself in many ways — including credit cards, the use of prepaid cards, and the fact that over 800,000 depositors walked away from banks between 2009 and 2011.

  4. Ron. Interesting thought. I, by the way, still really love my sweats with elastic bottoms, though living in the genteel North has made me averse to wearing them out of the house.

  5. Your daughters are completely right. Let the sweat pants go. They’re never coming back. In addition, I could not agree more with your comparison to credit cards and Gen-Y. I think like, Paige, that a lot of younger people are afraid of cards. We’ve been told for years that credit cards are a one-way ticket to debt. We watched our parents run things up on credit and never really saw them pay anything off. As a society we’ve learned to lean on credit as a normal way to purchase things. I do see a shift with our younger generations to save and then spend rather than spend and figure out how to pay for things afterward. I don’t really see it as a bad thing. It might be wise for financial institutions to educate their customers on proper uses of cards. They are not the devil, you don’t have to run screaming in the other direction. They can be used properly, and be a great thing. You might be on to something here. But seriously…definitely get rid of the pants. 😉

  6. LOVE the illustration of the sweatpants with the elastic bottoms…so true, Your daughters are doing a great service for you. Its hard to imagine Gen Y not using them…do the stats show they are using cash then or is there a movement back to check with them? Cards do carry a certain stigma about debt and kind of the launching pad for what is bringing down our great country (spending money you don’t have). This might come down to education, banks need to do a better job of educating people to not fear them but also how to use them smartly. I have a healthy fear of what cards can lead to (I am on the Gen X/Y boundry) but I still use them selectively when it makes sense and when I can afford to pay them off in a timely manner.

  7. I think young adults have a heathy fear of debt in general these days and credit cards are the poster children of debt. I am wondering how e-commerce plays into all of this? Other than Walmart, I’m not sure of any other retailer that does online shopping without a credit card? Amazon, iTunes, Google Play, Spotify and all of the other popular digital brands all need to be hooked into a credit card as far as I understand.

    Also, I think Lululemon Blaze Tights might be in your future. Although, you might want to run the idea past your daughters before ordering them online with your credit card…

  8. Paige: I think you hit the nail on the head. There may very well be a large group of Gen Yers for which credit cards have a negative connotation.

    But, I am with Trevor on this — it’s hard to imagine Gen Yers not using them. It’s a lifestage thing. Younger Gen Yers might not be having kids, buying homes, etc. just yet. But when they do….

    Unless, of course, Gen Yers are truly the first generation (in modern history) to not be materialistic. Muwahahahahaha! Yeah, that was good for a laugh.

  9. Funny you should mention Lululemon. Was in the mall last week, and stopped in to the Lululemon store. I got funny looks from the salespeople when I asked them where the yogurt pants were.

  10. Speaking as a member of Gen Y… I think youth/young adult approach to credit varies by background. My peers whose parents or grandparents have felt the burden of debt are hesitant to apply for credit cards, take on loans etc. However, for many credit cards are more of a chore than anything else. Most of us have had debit cards since we were 16, and because debit cards work everywhere and are more convenient–no withdrawal maximums, no need to remember to pay your bill– there’s no incentive to get a credit card except for the “you need to build your credit in case you want to apply for a loan eventually” argument. For young people with no plans to get married, buy a house, or go back to school, “eventually” often isn’t worth the effort.

  11. mfriedrichs says:

    Also yea absolutely no sweatpants with elastic bottoms. Ever.

  12. Melanie: But what about using a credit card as a means for generating rewards? My wife and I NEVER run a balance on our card(s), and like getting 2% back on everything we purchase. We can’t get that on our debit card.

  13. I am the same with credit cards Ron, we buy everything and pay it off monthly to get our Delta miles which then helps to pay for vacations. BUT, I know among my friends (mostly in their 30s) there is an anti-credit card movement happening. Many of them are getting out of debt and cutting up their cards because they got themselves into trouble. The problem I think is that you have to have a level of trust in yourself to not overspend and to actually pay it off as a priority or you start to go the wrong way quickly. For people who are paycheck to paycheck its pretty tough to execute that way.

  14. mfriedrichs says:

    Yes a relatively small subset of my friends use credit cards for rewards. But in my (limited & anecdotal) experience the transaction burden outweighs the rewards benefit for most of my peers (If I spend $500 a month with cards I really don’t care about 2%). Also in general awareness of the existence / magnitude of rewards is pretty limited. That could be an actionable insight–more rewards education / simple language advertising from FIs & credit card issuers.

  15. mfriedrichs says:

    I’m at the young end of Gen Y. This cost/benefit barrier might very well disappear as we start spending more and thinking more long term.

  16. It’s no longer necessary to use credit cards to earn great rewards. Companies like PerkStreet Financial offer 1% back on everything you spend on debit and you can earn a much higher rate on purchases at certain retailers. It’s a way for consumers to earn great rewards for spending money they already have. (Full disclosure: I used to work at PerkStreet and they’re now an Andera client).

  17. Laurie: Good point. I think rewards on credit cards exceed those on debit cards, on average, but your point is a good one.

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