Research findings released by Mintel in July revealed some fascinating information about the lack of credit card accounts held by 18-24 year olds. The research found that young adults are one of the most underrepresented age groups when it comes to credit card ownership, with only 30% holding an account.
Do the simple maths and you’ll realise that 70% of 18-24 year olds in the UK do not hold a credit card, creating a massive untapped seam of business for card providers. The only problem is, this generation is very difficult to sell to and motivate as they are struggling to gain financial independence and often living at home. Rising living costs, student debt and limited credit are all factors that Mintel believe are holding this generation back from reaching financial adolescence.
Conventional marketing techniques and card offers are unlikely to persuade the 70% to sign up for a credit card. Instead, providers need to push more than credit, they need to sell a product that can help give young adults some financial freedom. Suggestions to achieve this include financial health checks, personalised advice and help with financial plans.
The idea of helping people with financial plans and supporting their goals through sound money management advice suits perfectly the current appetite for responsible lending. Credit card holders across the age ranges are moving towards a more debt-averse, financial management attitude when it comes to lending. By instilling this in young credit card holders, credit card providers can help ensure that future generations are more likely to borrow responsibly.
The impact on a credit rating of missed repayments and poor debt management scarcely need explaining, but these are important considerations for new card holders. If educating a generation on responsible credit card use is something that lenders are planning to do, then that’s no bad thing at all.