News Releases

CHICAGO, IL--(Marketwired - Oct 2, 2014) -

• Survey finds millennials in Illinois turn to using credit when going on vacation (35%), getting married (31%) or caring for an aging parent (27%)
• Among the Sandwich Generation, credit is the go-to option for buying a car (86%), starting a business (70%) or sending a child to college (37%)
• BMO Economics: des pite an uptick in spring, credit card debt in U.S. is generally trending down

A survey of Illinoisans and their credit behavior commissioned by BMO Harris Bank found that Illinois residents are more likely than the American average to use credit when making major life purchases.

Most Illinoisans (89 percent) plan to take on a major expense in the next five years. For these purchases, 81 percent of millennials will use some form of credit (loan/mortgage, line of credit, or credit card). This compares to 70 percent of 35-54 year olds who would use credit, and 53 percent of those over 55

At the national level, notably fewer American millennials said they'd use credit for a big purchase (67 percent). Sixty-three percent of those aged 35-54 plan to use credit, and 54 percent of those over 55 said they would.

Illinois residents were first asked to select which major life purchases they were expecting to make. Buying a car topped the list across all ages, the same as was found across the U.S.:

Purchase		18-34 years		35-54 years		55+ years
Buying a home		53%		25%		10%
Buying a car		62%		61%		53%
Renovating your home		21%		23%		26%
Having a child		43%		7%		0
Paying for a wedding		34%		13%		8%
Starting a business		12%		7%		3%
Going on vacation		57%		40%		48%
Going to college yourself		25%		3%		< 1%
Sending a child to college		7%		23%		2%
Caring for aging parents		17%		23%		10%

"Before making a major purchase on credit, whether it's a credit card or loan, it's important to come up with a payment plan. Large purchases that are sporadically made can negatively impact your credit score by using up a large percentage of your credit limit. Typically, the debt-to-credit ratio should stay under 35 percent," said Wallace Harris Jr., Regional President, BMO Harris Bank. "Credit can often be the most feasible option for the purchases that come with major life stages. Putting a plan in place before getting a loan or using a credit card is the first step to ensuring the process is as stress-free as possible."

When asked about the use of credit for these purchases, Illinoisans across all ages had similar intentions to use credit to buy a home: 84 percent of those aged 18-34, 86 percent of those 35-54 and 81 percent of those over the age of 55. However, in the breakdown of types of credit, those in the Sandwich Generation -- the cohort that is simultaneously caring for children and their aging parents -- would more likely opt for a mortgage (86 percent) than a line of credit ( < 1%) compared to millennials (79 percent and 9 percent respectively).

In many categories, Illinois residents were more likely than the American average to use credit for a major life purchase, education was one exception. While 47 percent of Illinois millennials plan to use credit to send themselves to college, across the U.S. that number rises to 62 percent. Similarly, among the Sandwich Generation, 56 percent in Illinois would use credit to send themselves to school, compared to 74 percent of Americans.

Below is a table depicting who turns to credit for what purchase:

Purchase Using Credit		18-34 years		35-54 years		55+ years
Buying a home		84%		86%		81%
Buying a car		66%		72%		56%
Renovating your home		48%		39%		41%
Having a child		16%		13%		0
Paying for a wedding		31%		26%		27%
Starting a business		56%		70%		55%
Going on vacation		35%		18%		22%
Going to college yourself		47%		56%		0
Sending a child to college		10%		37%		0
Caring for aging parents		27%		3%		24%

"Following the Great Recession, consumers have been more cautious in their use of credit cards, despite this method of payment remaining as flexible and convenient as before. There is a greater awareness that credit card loans tend to be more expensive than other forms of borrowing and growing loan balances can quickly escalate. As a result, Americans are showing signs of improved credit behavior, paying off their balances more determinedly and drawing down less of their credit limits," said Michael Gregory, Head of U.S. Economics, BMO Capital Markets. "According to the New York Federal Reserve, total credit card debt peaked above $865 billion at the end of 2008 and, by early last year, it had fallen to around $660 billion -- a near 25 percent reduction in just over four years. While credit card debt rose modestly in the spring, it h as been essentially flat in recent years, even as cards in circulation and credit limits have moved higher -- a sign that the caution continues."

BMO Harris offers the following tips for Americans who plan to use credit for major life purchases:

• Balance it out: irregular, large purchases made on a credit card can negatively impact your credit score. It is recommended that credit card users do not use more than 35 percent of their available balance.
• Think big picture: credit card use is one piece of the puzzle in building your credit score. Using a loan or line of credit for major purchases also plays into your rating. Paying down these loans in a timely manner will be beneficial.
• Opt for a low-rates: If you are carrying a balance on a higher rate credit card, consider moving your balances to a low interest-rate loan or line of credit, or a lower-rate credit card
• Travel smart: using a credit card to pay for a vacation or part of one can be an opportunity to build up rewards points. Certain cards will also provide insurance for travel-related mishaps, like lost luggage.
• Consolidate your debt: if eliminating the debt is not possible in the short-term, amalgamate the debt you do have to minimize interest. If you have too many cards, consider getting a line of credit to help clear the balance.

Survey results cited in this report are from interviews with an online sample of 1,004 Americans, (including 401 residents in Illinois) conducted between July 2^nd and July 4^th, 2014. The margin of error for a probability sample of this size in Illinois is ± 4.9%, 19 times out of 20.

About BMO Harris Bank
BMO Harris Bank provides a broad range of personal banking products and solutions th rough more than 600 branches and approximately 1,300 ATMs in Illinois, Wisconsin, Indiana, Kansas, Missouri, Minnesota, Arizona and Florida. BMO Harris Bank's commercial banking team provides a combination of sector expertise, local knowledge and mid-market focus throughout the U.S. For more information about BMO Harris Bank, go to the company fact sheet. Banking products and services are provided by BMO Harris Bank N.A. and are subject to bank or credit approval. BMO Harris® and BMO Harris Bank® are trade names used by BMO Harris Bank N.A. Member FDIC. BMO Harris Bank is part of BMO Financial Group, a North American financial organization with approximately 1,600 branches, and CDN $586 billion in assets (as of July 31, 2014).