How Many Americans Have a Credit Card?

A ZeroHedge article titled Avoiding The Mistakes Of Our Parents" - Only A Third Of Millennials Have A Credit Card reported the following:

"According to a study published by Bankrate, many millennials remain deeply distrustful of banks and borrowed money...while a majority of older Americans own credit cards, only 33% of adults between the ages of 18 and 29 say they have one."

The Bankrate study also claimed that credit card ownership was at 62% of consumers between the ages of 50 and 64, and 68% of consumers 65 and older.

This would be a good time to remind you of Shevlin's Law: For every statistic that proves a point, there are two that refute it.

Sure enough, there are (at least) two data points to refute the Bankrate study. One comes from Statistic Brain which found that 78% of Americans have a credit card.

Credit Card Ownership Statistics
Total number of credit cards in use in the US1,895,834,000
Total number of US credit card holders199,800,000
Percent of people in the US who do not have a credit card22%
Average number of credit cards per person4
Average age when receiving first credit card20
Percent of credit card owners with a gas card11.9%
Percent of card holders who have a rewards credit card60%

Source: Statistic Brain

Statistic Brain also found credit card penetration to be nearly as high among college students as it is among older consumers:

College Student Credit Card Ownership 
Percent of undergraduate students with a credit card76 %
Average credit card debt of an undergraduate student$2,200
Percent of undergraduates who had no credit history2 %
Percent of undergraduate students with 4 or more credit cards48 %
Percent of incoming freshman who already have a credit card39 %
Percent of students who pay their card in full each month65 %

Source: Statistic Brain

The second data point comes from Gallup who found that, in 2014, 71% of Americans had a credit card. If you're thinking the percentage has declined since then, the data doesn't bear you out. According to an August 2016 TransUnion report, 10 million new consumers entered the credit card marketplace in the year leading up to Q2 2016.

The Credit Card Boomlet is Alive and Well

In an earlier News Not Noise post, we wrote that the credit card boomlet that has occurred over the past five years still has legs for three reasons:

  1. Demographic trends. Millennials who are currently between the ages of 26 and 34 have driven the recent growth in credit card use. This group represents 12% of the population. Younger Millennials, currently between 19 and 25, comprise 9% of the population. Assuming similar credit card usage patterns--and there's no reason to not assume that--credit card growth will extend through the next five years.
  2. Tax reform. The recent tax changes eliminate the deduction for home equity loan and line of credit interest payments. While demand for these financial products have been on the decline since the financial crisis, changes in the tax code will likely shift consumers' financing activity further away fro HELOCs toward credit cards. With the increase in the standard deduction, tax reform will put more money in consumers' pockets--which won't stay there long.
  3. Economic growth. When times are good, Americans spend money. And times are getting better, if not already good. Retail sales were up 4.9% during the 2017 holiday season, the largest year-over-year gain since 2011, according to Mastercard’s SpendingPulse Report.

According to Cornerstone Advisors partner Steve Williams: "Products tied to the 'adulting' millennials can shift weaker debit interchange from checking accounts over to more profitable credit card margins without encouraging Millennials to go further into debt." This is an imperative for credit unions and community banks for two reasons:

  1. Declining debit margins. Cornerstone Advisors Senior Director Tony DeSanctis estimates that financial institutions will see a 3% decline in interchange revenue for 2018 if their transaction volume and value are the same as 2017.
  2. Megabanks' credit card cross-sell success. Among 20-something Millennials whose primary FI is a megabank, 42% said they got a credit card from that bank in the past year. Among 30-something Millennials that percentage is even higher--50%. Credit unions are seeing some success getting their credit cards in the hands of their younger Millennial members, but not as successful with the older Millennials (31% versus 19%). Community banks' credit card cross-sell ratios were the worst among the four types of institutions.

Percentage of Millennials Getting a Credit Card From Their Primary FI in the Past Year

Primary FI:Young Millennial (1988-1996)Old Millennial (1980-1987)
Credit union31%19%
Large regional bank20%24%
Community bank4%18%

Source: Cornerstone Advisors survey of 2,015 US consumers, Q3 2017

So, how many Americans have a credit card? The answer is: It doesn't matter. What matters is that community-based financial institutions should look at credit cards as a growth opportunity and a matter of maintaining competitive parity.

Ron Shevlin
Director of Research
Cornerstone Advisors