47% of younger UK consumers do not hold credit card, research finds

The rise in popularity for buy-now-pay-later (BNPL) schemes could explain a trend in fewer young people using credit cards, new research from GlobalData has suggested.

In a survey conducted by the data and analytics company, 47% of people aged between 18 and 34 revealed that they do not currently own a credit card.

This figure has risen by 8 percentage points since a survey in 2016, at which time 39% didn’t own a credit card.

Banking analyst at GlobalData, Jaimini Pattani, noted that alternative financing options, such as BNPL schemes, are being increasingly offered on social media.

“They also make purchasing on credit easier – allowing buyers to simply view credit options at the point of making a large purchase, rather than having to apply for a credit card at the bank,” Pattani commented. “Further, BNPL services offer interest-free purchases, have softer credit checks, and are often manageable via apps.”

GlobalData suggested that despite efforts from banks to take steps to appeal to younger generations, their efforts are “falling short”, and the company believes that retail banks need to show the advantages that their products can offer over BNPL schemes.

“There is a lack of knowledge or concern for the implications of using BNPL,” Pattani added. “Retail banks have an opportunity to educate customers about how BNPL systems are often operating in an unregulated environment, have a lack of transparency around missed payments, and the impact this has on their credit files.

“However, they also need to tackle the benefits of BNPL head on, providing a credit card that meets the needs of younger shoppers or risk falling further and further behind.”

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