• by Colleen G. Steinman , March 2, 2016

Millennials struggle to use credit effectively, often making payments late and maxing out credit cards, according to a study of more than 1,000 adults aged 19 to 34.

The study, commissioned by Experian Consumer Services, shows members of Generation Y don’t know how to use credit effectively. More than 50% of those surveyed didn’t know their credit card interest rate, and 32% weren’t aware of the spending limit on their card. They also do not keep track of their card spending, with almost 40% of survey respondents in the dark about their spending levels.

Young adults who obtain their first credit cards or take out a student loan may not fully understand how interest rates are calculated or the importance of making timely payments, Rod Griffin, Experian’s director of public education, tells Marketing Daily. 

“Managing credit and personal finance aren’t subjects typically taught in schools so individuals enter adulthood without much formal education,” he says. 

The survey revealed a variety of attitudes about credit, and habits that can negatively impact credit scores. For example, 64% consider credit cards “dangerous,” but almost one-third of them have maxed out a credit card and almost a quarter have had their interest rate increased.  About 18% rarely or never pay their student loan payments on time, and 29% have paid a late fee.

The best option for Millennials is to learn more about credit by using the many online tools available, Griffin said. He hosts a blog on Experian.com that offers resources and answers questions.

Additionally, Millennials can do the following:

• Assess their overall financial situation by creating a detailed monthly budget with short- and long-term financial goals.

• Set up payment strategies that work for their budget.

• Seek help managing their debt from an accredited credit counselor.

• Keep track of their credit score.

“As Millennials utilize these forms of credit, they should have someone they trust, like a parent or an older sibling, help them read through the terms and conditions and explain how the loan process works,” he said. “As they gain more awareness about how to manage credit, they will feel more confident and therefore, hopefully make better decisions.” 

The survey was commissioned by Experian Consumer Services and produced by research firm Edelman Berland, which conducted the national online survey of 1,002 Millennials (ages 19 to 34) from Aug. 14 through Aug. 19, 2015. The margin of error is plus or minus 3.1% overall.