Young people are twice as likely to cancel a credit card account as older consumers, according to new research.
Credit reporting agency illion has delved into the decline in credit card usage, reporting that among people under age 25 the fall in credit card account numbers was twice the average fall among all ages during the pandemic period.
Since October 2018, the number of credit card accounts has fallen by 1.6 million, representing A$11.6 billion of credit limits.
COVID-19 has accelerated the decline. The number of card accounts fell by 80,000 over the 11 months to February and then the number jumped to 116,000 in the first four months of the pandemic.
“People have thinner wallets as they remove extraneous plastic in pursuit of a less risky credit profile,” illion said.
And it found that cards are no longer a status symbol, as they once were.
People in their 40s have also given up credit card accounts at an above-average rate, while Baby Boomers have not changed much at all.
The buy now pay later market is dominated by people under 35, who make up more than 50 per cent of users. For many under 35s, giving up their credit card meant switching to a BNPL account.
“However, it should be noted that the percentage of consumers who have used a BNPL account is still very low, at less than one in 10 Australians,” illion said.
People under 35 have the highest credit card delinquency rate.