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Young Americans Are Ditching Credit Cards

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#1 Hum

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Posted 14 June 2013 - 22:03

The number of young Americans who are living without credit cards has doubled since the recession, according to new research.

About 16% of consumers ages 18 to 29 didn't have a single credit card by the end of 2012 -- up from 8% in 2007, according to data that credit score provider FICO collected from the credit files of millions of consumers.

As a result, credit card debt has declined by about a third among this age group -- from an average $3,073 to $2,087 per person.

After watching older generations -- like their parents -- get hit hard by the recession, many younger Americans are shying away from credit and opting for debit cards instead, according to FICO.

Prepaid cards have also become attractive alternatives, said John Ulzheimer, president of consumer education at SmartCredit.com.

"[T]here has been very aggressive marketing of prepaid debit cards over the past few years targeting young people and minorities," he said. "So it's not a surprise that more young people are using prepaid debit cards over credit cards."

In addition, the CARD Act, which took effect in 2010 and requires consumers under age 21 to have a co-signer or to earn enough income to make full payments, has also made it harder for this group to qualify for credit cards, FICO found.

Along with credit card debt, overall debt has fallen among this younger group. Even with the surge in student loan debt, this younger group has seen an even more rapid decline in other debts like mortgages. And this shedding of debt has translated into higher credit scores, with the number of consumers 18 to 29 years old with excellent FICO scores of 760 or higher jumping from 8.6% in 2005 to 11.2% last year.

Older Americans are another story, however. While they also lowered their credit card debt, they racked up more auto and mortgage debt.

Consumers 40 and over therefore have more overall debt today than they did in 2005. And as a result, FICO scores have fallen 1.7 percentage points among the 40 to 49 age group, 1.8 percentage points for those ages 50 to 59 and 3.8 percentage points for consumers 60 and older.

"[P]arents are having to take on more debt to help their kids make ends meet," said Ulzheimer. "And, thanks again to the CARD Act, more parents are being asked to co-sign for their younger non-working children who want a credit card."

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#2 notchinese

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Posted 14 June 2013 - 22:06

That is dumb. Like it or not you need good credit. Credit cards are a great thing, just don't be an idiot with them. Its not that hard.

#3 vcfan

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Posted 14 June 2013 - 22:09

the reason why I have credit cards is not for the actual borrowing of money, but you need a credit card to book a hotel room,rent a car, and when you apply for things like car financing,getting approved for a phone, or applying for a mortgage. But I like these visa and mastercard debit cards the banks are doing. For a lot of people, this eliminates their need for actual credit cards,and this prevents them from going into debt,but then again,how do you build credit?

#4 Sylar0

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Posted 14 June 2013 - 22:22

That is dumb. Like it or not you need good credit. Credit cards are a great thing, just don't be an idiot with them. Its not that hard.


Erm say what why the hell would I need credit im not American but its a similar thing here in the UK older people all have credit us young people im 22 nearly (long an adult in this country) don't and won't ever have one. Why would I need a credit card or good credit ill just live with what I earn.... seriously enlighten me I don't expect to need a credit history to get a mortgage should I even want one.

#5 greenwizard88

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Posted 14 June 2013 - 22:25

I have a credit card, and get about 4 offers a month from various companies. I'm also not an art history major living at home, so...

#6 COKid

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Posted 14 June 2013 - 22:45

Credit cards are a great thing...


Lol. Yeah, they're great all right.

For myself, I'm proud to be debt AND credit card free! I pay as I go. Imagine that in this day and age. Delayed gratification. What a concept! The only thing I will need credit for will be a mortgage, if I even decide to buy someday. All the rest; cars, vacations, etc., I pay as I go. I tell ya, it's feels great to be off the wheel.

But for sure, you have fun with your credit cards. :woot:

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#7 OP Hum

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Posted 14 June 2013 - 22:47

... seriously enlighten me I don't expect to need a credit history to get a mortgage should I even want one.


In the USA, not having an established credit history can hurt your chances of borrowing.

#8 Anibal P

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Posted 14 June 2013 - 22:47

That is dumb. Like it or not you need good credit. Credit cards are a great thing, just don't be an idiot with them. Its not that hard.



You can have and get great credit and never get a ripoff card, it's only purpose is to keep you in debt indefinitely

#9 Sylar0

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Posted 14 June 2013 - 22:50

In the USA, not having an established credit history can hurt your chances of borrowing.


Same here but what would I borrow for? Seriously my parents have never borrowed anything in their lives.

#10 OP Hum

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Posted 14 June 2013 - 22:54

^ Smart -- Props to them ;)

#11 notchinese

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Posted 14 June 2013 - 23:09

You can have and get great credit and never get a ripoff card, it's only purpose is to keep you in debt indefinitely


I have never held a balance on my CCard, not once. They are better than debit card because they are safer, and some places even require credit cards. I don't have an ounce of debt.

Same here but what would I borrow for? Seriously my parents have never borrowed anything in their lives.


Do your parents live in a house made of dirt?

#12 farmeunit

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Posted 14 June 2013 - 23:12

Erm say what why the hell would I need credit im not American but its a similar thing here in the UK older people all have credit us young people im 22 nearly (long an adult in this country) don't and won't ever have one. Why would I need a credit card or good credit ill just live with what I earn.... seriously enlighten me I don't expect to need a credit history to get a mortgage should I even want one.


Some people have them for emergencies. If you're living on what you earn, but don't save anything, what happens if your car needs repairs, or something else happens? I haven't had a credit card for years, because I get in trouble with them when young, but there are times I wish I had one "just in case". Luckily, I've had friends that could help out. Sometimes that's not an option.

#13 Spartan Erik

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Posted 14 June 2013 - 23:17

As long as you use your credit card responsibly and have the cash in your checking (or less preferably, savings) to cover the purchases, that's perfectly fine.

I use my Chase CC for all purchases since I get rewards points/cash back, and extra % off purchases from select retailers depending on the quarterly promotion cycle. It's better than nothing that I would receive via cash or debit. Just pay the bills on time to avoid interest, and you're A-OK

#14 arachnoid

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Posted 14 June 2013 - 23:28

Of course these figures may be biased by the fact long term unemployed people may be unable to get credit cards.

#15 perochan

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Posted 14 June 2013 - 23:31

Same here but what would I borrow for? Seriously my parents have never borrowed anything in their lives.


well, if you guys make enough money to pay everything in cash, then i guess it is ok to not have credit cards.