18 - 24 year olds are responsible for over 30% of credit card cash withdrawals

Many of us are feeling the financial pinch at the minute, but it appears that 18-24 year olds are adopting particularly risky ways to ease their cash-flow. A study of UK Credit Card data has shown that one in five of us are withdrawing money via our Credit Cards.

Young people live in a volatile financial world. They generally don’t have the safety blanket of savings, and many of their jobs are temporary. This can mean inevitable cash-flow disasters where they might a) turn to Payday Loan companies b) use their overdrafts or c) use their Credit Cards for access to cash. One could speculate that the latter option is the lesser evil.

One third of Credit Cards cash withdrawals are by 18-24 year olds, whereas the over 55s seem to avoid the trap.  So how do we explain this distinct gap in attitudes? Some will claim that the over 55s are more financially savvy, but perhaps this isn’t giving young people enough credit (not a pun).

You could make a good case that some less well-off young people might be gathering a small amount of savings – a buffer to avoid genuine poverty – which they protect by using their Credit Cards when they start getting near the red line of their accounts.

There are distinct regional patterns regarding the use of Credit Cards to obtain money, which emphasises the case for economic necessity rather than thoughtless frivolity. The North East is particularly afflicted by this phenomenon, probably due to 56.25% of its citizens running out of money at the end of each month.

However, there is a lot of naivety involved, especially amongst the young. One in four are unaware of the fee (£3.34 on average) which banks charge for Credit Card cash withdrawals. Many will also be unaware that you often pay a higher rate of interest on the cash you’ve taken out.

Some banks may be targeting Credit Card withdrawals as a keen source of revenue by applying these stealth charges (one in four of us are oblivious to the added costs). It’s important to find the right Credit Card for your usage, resources like Totally Money are invaluable for comparing the pros and cons of each card. 

The Halifax Clarity Card would be particularly effective for the younger generation who should also consider things like 0% balance transfers.