‘Millennials applying for their first credit card don’t know they have to pay interest, an expert has warned.
MoneySuperMarket has revealed that youngsters applying for a credit product often have “no understanding” of what they will have to pay back, but often get sucked into the idea of credit cards as a way of buying things they can’t afford.
Kevin Pratt from MoneySuperMarket explained that credit cards had become a “minefield” for many millennials “because they don’t realise what they will have to pay back.”
The consumer affairs expert said: “We have had some evidence that when credit cards advertise as having zero per cent interest, often for a fixed period, or something similar, young people think that all you will pay off is what you’ve spent.
“They have no understanding and think it’s a card that is free to use – but as most of us know if you don’t pay the money back you’ll start paying interest and that can really snowball.”
He warned that many of those aged between 18-24 do not realise how dangerous it can be to miss a payment, but that they are especially vulnerable because they see it as a way to buy the newest and the best goods such as phones, or festival tickets.
He added: “Many store cards charge interest at an alarming rate, but in general we are consumption led and especially that younger generation get caught up in wanting the newest phone or whatever, and then get caught out when paying the money back.”’