Millennials Get Clever With Credit

The Millennial generation is usually defined as people born between 1980 and 2000. That places the demographic anywhere between 36 and 16 years old -- and as I'll turn 26 at the end of the year, I'm smack in the middle of Gen Y.

It's always dangerous to stereotype an entire generation of people, especially one as large as the Millennials. According to data released in June 2015, there are over 83 million of us in the United States. While blanket statements won't cover every last member of Gen Y, there are some formative experiences we collectively shared that shaped who we became as adults, or who we're becoming as we continue to grow up.

Personally, nothing stands out more than the stock market crash of 2008 and the subsequent recession that followed. The economic downturn shaped my worldview in general -- and it certainly affected how I view and understand finances. It changed the way I managed money, too. And according to recent research that evaluated the way Millennials interact with financial products and tools, I'm not the only one whose behavior looks radically different than older generations.

A Shift Away from Old Financial Behaviors

As a whole, Millennials don't behave quite the same as generations past. This is due in part to our formative experiences with the Great Recession -- and in part due to things like a crushing student loan burden. Gen Y delays big purchases and financial responsibilities simply because we're already overloaded with loans from school that take up any extra room that may have existed in our budgets.

In general, Millennials are more frugal, selective, and educated about personal finance than our parents. We're not the rabid consumers that the Baby Boomers were (and are). An article in the September 2012 edition of The Atlantic pondered whether or not Gen Y was the "cheapest generation," and covered how reduced consumerism among younger generations was causing some marketers to worry about declining sales.

But it's not that Millennials don't or won't spend. Yes, we have our own financial challenges to overcome -- but so does every generation. Gen Y will spend on what we value. We're just changing the way we want financial services to help us do so.

People in their 20s and 30s are helping drive the happening-right-now revolution in financial media, where news and advice comes not from professionally-trained experts and old-school outlets, but from financial bloggers and podcasters. Establishing trust is huge with younger demographics, and it seems like down-to-earth bloggers with everyday experiences are doing this far better than bigger players in the industry.

That's a trend that seems to exist in all areas of the financial services industry, not just media. Millennials want virtual banks, not the big, brick-and-mortar companies they associated with making toxic mortgages and then foreclosing on the families who couldn't afford them. Millennials are willing to give robo-advisors a try, and tend to shun Wall Street brokers who helped tank the economy.

And now, it seems, Millennials want their credit usage to adapt, too, and are turning to more modern brands they trust to help them out.

How Millennials Are Changing Credit

Gen Y is changing credit largely because of the way they don't use it. 63% of Millennials don't have a credit card -- and 29% find the current process of using a credit card online downright annoying.

Instead, Millennials are seeking out new financing options that make more sense for existing habits and preferences. While the majority don't even have credit cards, 50% are willing to try new products from tech companies they view as innovative and trustworthy. They're rewarding the companies that are willing to listen in and change the way things have always been done in favor of doing things in a way that integrates well with modern tech and consumer habits.

Companies like PayPal are ahead of the game, and serve as a good example for other financial brands who want to capitalize on the demand from Millennials for better credit services. PayPal Credit offers Gen Y a smarter, savvier way to finance purchases online (and even send money with that line of credit). This is critical because of the way Gen Y does value the ability to research and make smart purchasing decisions before spending money. We need a way of spending that aligns with the way we want to shop.

Millennials are getting clever with credit, and want more options to satisfy the way they prefer to shop and manage money. With the oldest members of our 83-million strong generation reaching 36 this year, we're all grown up, tech-savvy, and ready for financial tools that are too. It's past time that more financial institutions change the way they allow this cohort of consumers to pay for purchases.