After a year of saving more than they had before the recession, young consumers are beginning to show interest in credit again. Just under one third of people 25 and under plan to open a new credit card account this year, according to a recent study by Cardbeat, a syndicated monthly publication of Auriemma Consulting Group (ACG).
Interest in obtaining a new credit card was at 11 percent among the population overall, but twice as high among those under 25 years old, the research found. New regulations have sharply curtailed the marketing of credit cards to college students, according to Patricia Sahm, Managing Director at ACG. “So young adults are less likely to already have a wallet full of cards, making them a particularly responsive segment.”
This marks an opportunity for banks, who after writing off huge losses of bad debt in the recession, are assessing customer needs as the economy improves, making serious efforts to establish deeper, multiple product relationships that integrate the total value of their customers, Sahm said.
“The initial marketing is to their base of deposit customers," said Sahm. “Their existing relationship with checking and savings accountholders gives them insight into how to segment and market to these customers.”
However, Sahm said, young adults are also less likely to have strong ties to their bank, and put less emphasis on local presence than older consumers do. Large national card issuers like American Express and Discover may find it easier to compete with bricks-and-mortar banks for young customers, she said.