Young Americans Are Ditching Credit Cards

[moloko]

Yes you do need to build credit this day and age but this is still good news to read. I got rid of all my credit debt a few years ago.  Now we only pay cash for items.  I only use a credit card when i travel and pay it off as soon as i get back home. 

[Argi]

I don't need a credit card but I have one to build credit score.  Simple as that.  Needing a credit history for some things is a fact of life.

[remus_lupin]

I am 21 now, I have used my debit card maybe... once? No... Twice!

 

I have had three credit cards for the past few years, never paid any annual fees nor any interest. EVERYTHING I buy is with credit cards and I pay it off every month.

 

Why do I have three credit cards?

 

Well because Credit Card #1 gives me 2% back on gas & groceries (was 5% for the first 6 months) - so I use it for... Gas and groceries! https://www.applyonlinenow.com/CACCapp/Ctl/entry?sc=COMP&lc=en_CA

 

Credit Card #2 is an SPC (student price card) there are a bunch of places that give you various discounts (such as 15% etc.) so if I am shopping at a place with SPC benefits... I use my SPC card http://www.bmo.com/home/personal/banking/credit-cards/student/spc-cashback-student-credit-cards

 

Credit Card #3 gives me 1% back on everything. So if I am not buying gas/groceries or getting anything from an SPC location then I use this credit card.

(Standard CC no point in me providing a link - pretty much everyone offers one similar to this)

 

None of the above have annual fees, and I probably get about $150 back per year. It's not a whole lot... but why not? What do I pay in annual fees? $0 What do I pay in interest? $0...

 

If I wanted to use my debit card how many free transactions do I get? 10

If I want to use more than 10 transactions on my debit card, what do I pay? $1/transaction.

 

However the debit card argument is null since there are obviously other debit card plans I could be on. I just chose the one I have because I never use it.

 

This said, some people have credit cards so they can get things they can not afford right now, and they just make the minimum monthly payments. Which is obviously not a good thing, as long as you pay off your credit cards on time every time, there is no disadvantages to having one, again, unless you happen to splurge and buy more than you can afford.

 

Edit: I actually have a fourth credit card. Again no annual fees... It's a Scene Visa Card... I got it because it came with 3 or 4 free movie theater tickets (in the form of scene points)... Then whenever I go to the movies I use that credit card because I get added benefits... I rarely go to the movies though, but hey, if I do, it's there. 

[devHead]

This is a general message to everyone I quoted and in general. I am horrified to hear some of the comments so I am replying belatedly. 1. I am not poor nor is my family my father drives a taxi. 2: See point one nor am I rich I am amazed my comments got miss interpreted, if we can't afford something we save or don't buy it point blank. This seems an unknown idea in America very odd. However my family could be odd since none of us have ever had a credit card or a phone contract. Just wanted to clear up some miss conceptions.

 

A couple things to keep in mind when posting, bro:

 

1. MultiQuote is a great feature, but putting that many comments above your post is a little overboard, especially since you aren't really responding to any particular comments. 

2. Frankly, which of the comments you used above are you horrified about?  None of the comments are really horrifying. Now, if someone said something like, 'I applied for a credit card and was declined, so I decided to explode my bank', that would be horrifying.  But really, people talking about their stand on credit and making purchases isn't really worthy of a word as strong as 'horrifying'.

3. I realize English is likely not your first language, but misinterpreted is one word and misconception is one word.  Actually, "miss conception" sounds like a beauty pageant contestant that had to drop out due to pregnancy. 

4. Never having a phone is odd; never having a phone contract isn't really that odd.  Buying something 'point blank' is odd.

[fintechfooty]

100% Incorrect. That's not how credit scores are determined.

 

One of the determining factors is credit utilization (percentage). If you are using $500 of a $5000 limit, that's 10%.If you are using $500 of a 10,000 limit, that's 5% which is better.

 

No one is forcing you to use your available credit. 

 

I make a yearly salary (pre-tax) of under $50,000. 'Yet I have about $25,000 in available credit. I pay off each card every month in full. Rarely use more than 5% of my credit limit. 

exactly! just use it. Even if you spend $20 and you pay it off right away, your still getting good credit. It's just utilization. You never know when you're going to need it.

[DeadEndAccount]

For people talking about 'building up a good credit record' - at least where i live you don't need to a credit card to build it up - pay your bills on time, no debt collectors, maybe have some savings, a good employment track record etc. all contribute to whether you're credit worthy or not. Regarding debit cards, I don't know what the cost is in the US but where I bank all my accounts are online where I pay no monthly or transaction fee with the Visa Debit card costing me $10 per year. When ever I hear about banking in the US it sounds like my own country 30+ years ago with people manually cashing their cheque given to them by their employer! good lord - that kind of crap still happens in apparently the 'most advanced economy in the world'?

[MandateOfHeaven]

Fascinating to me what is the rational with that why does ones credit score have anything to do with employment not something I have heard of.

I believe companies, at least in the U.S., uses credit history to gauge how financially responsible a person is, and that somehow can offer them insight into how responsible a person can be in other things. This practice is common when applying for a white collar job.

Unfair, I know.

[ILikeTobacco]

For people talking about 'building up a good credit record' - at least where i live you don't need to a credit card to build it up - pay your bills on time, no debt collectors, maybe have some savings, a good employment track record etc. all contribute to whether you're credit worthy or not. Regarding debit cards, I don't know what the cost is in the US but where I bank all my accounts are online where I pay no monthly or transaction fee with the Visa Debit card costing me $10 per year. When ever I hear about banking in the US it sounds like my own country 30+ years ago with people manually cashing their cheque given to them by their employer! good lord - that kind of crap still happens in apparently the 'most advanced economy in the world'?

What are you babbling on about? We use direct deposit, no charge, no manual cashing of checks. Debit cards cost nothing. Using them costs nothing, well unless you are stupid and use it with a rival bank. When I say nothing, I mean nothing. Not even the $10 you are being charged with is the dumbest thing I've heard. You pay to use your own money? Are you really judging a nation based on your ridiculous assumptions after admitting to that you use that kind of backwards system?

[tsupersonic]

For people talking about 'building up a good credit record' - at least where i live you don't need to a credit card to build it up - pay your bills on time, no debt collectors, maybe have some savings, a good employment track record etc. all contribute to whether you're credit worthy or not. Regarding debit cards, I don't know what the cost is in the US but where I bank all my accounts are online where I pay no monthly or transaction fee with the Visa Debit card costing me $10 per year. When ever I hear about banking in the US it sounds like my own country 30+ years ago with people manually cashing their cheque given to them by their employer! good lord - that kind of crap still happens in apparently the 'most advanced economy in the world'?

Yes, there are plenty of ways of building credit, but having a credit card is an excellent way to build credit. Depends on the bank, my bank doesn't charge me anything to have a debit card - as long as I maintain a certain amount. Most people (actually everyone) I know of have direct deposit. I have no idea what you're getting it, but you have it all wrong...

[ILikeTobacco]

I believe companies, at least in the U.S., uses credit history to gauge how financially responsible a person is, and that somehow can offer them insight into how responsible a person can be in other things. This practice is common when applying for a white collar job.

Unfair, I know.

Depends on the job. People with access to things like trade secrets or accounts. Someone who is financially irresponsible or in a bad spot financially can be exploited. However, in some cases, I agree and it is unfair.

[ANON86364]

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:

 

 

A couple things:

Having and using a credit card does not automatically put you in "debt". No more debt than you have to your utilities provider every month.

There is inherent protection provided to you when using a credit card.

Paying as you go is not inherently "smart". Renting for your entire life ends up costing you more than a proper investment.

 

There's really no need to be condescending about it especially when you don't understand the basics of how credit works or how it can benefit you. I live my life pretty much pay as I go as well while using credit. I'll pay my bills, gas, groceries, etc. with a credit card and pay it off at the end of every month. I get good credit reports, free rewards, my bank statements are simpler. Why wouldn't you? It seems to me your comments are exactly the reasoning behind this trend. It's an extreme move away from the realization many kids had when they learned they could borrow without knowing it wasn't free.

[matt4pack]

The fact that young Americans are ditching credit cards just shows how dumb society is becoming.  

 

So you can't manage your budget enough to buy what you can afford with a credit card and just pay it off each month?  While at the same time building credit, protecting yourself from fraud, earning free rewards, and having it in case an emergency arises where you actually might need credit.  If people really can't handle that level of personal responsibility then we are doomed.

[DeadEndAccount]

Yes, there are plenty of ways of building credit, but having a credit card is an excellent way to build credit. Depends on the bank, my bank doesn't charge me anything to have a debit card - as long as I maintain a certain amount. Most people (actually everyone) I know of have direct deposit. I have no idea what you're getting it, but you have it all wrong...

 

The way the credit system is that many only report if you don't pay but there is no record of 'good payment' meaning someone could have no record because they've always paid their bills on time - which causes problems. Many businesses I know are now opting into the 'positive reporting' system where your good behaviour is reported so that when taking on a new customer there is a record of their complete history rather than just the 'bad news'.

 

Regarding the bank - for me they charge me nothing because I opt out of paper transaction summaries at the end of each month which saves me the $3 fee. Given that I can search my transactions right back to when I first opened my account with them there is no point in having them being sent out.

 

Regarding the pay cheques, it is just my impression based on what I read on line with people actually being paid with a cheque such as welfare recipients - where I live you cannot get paid via cheque when it comes to welfare or being paid at work.

 

The fact that young Americans are ditching credit cards just shows how dumb society is becoming.  

 

So you can't manage your budget enough to buy what you can afford with a credit card and just pay it off each month?  While at the same time building credit, protecting yourself from fraud, earning free rewards, and having it in case an emergency arises where you actually might need credit.  If people really can't handle that level of personal responsibility then we are doomed.

 

 

You already get that with a Visa Debit card and your accounts area already protected under standard EFTPOS fraud protection along with other protection. The only benefit you gain out of a credit card is a line of credit which for many people is too tempting to use thus to avoid the temptation they don't have it at all.

[MandateOfHeaven]

People seem to be ignorant to how credit works in the US. If you want to get electricity and water turned on, step one, check your credit. Don't have a credit history, that's fine. Just pay 2 to 3 months worth of bills as a nonrefundable deposit that never gets applied to your account. What's a few hundred dollars. Want a phone, cell or land line? That's fine to, pay another non refundable, non usable deposit. Want a buy a house, no problem, just pay a 20% down payment to qualify for a high interest home loan. Can't afford it? That's fine, just rent. But first, pay a few months rent up front, assuming they allow you to move in at all with no credit. The fact is that without a credit history in the USA, you will loss thousands upon thousands of dollars even though it costs nothing and has no risk involved to built a credit history. Fun fact of the day, get a credit card with rewards. Use it to buy everything and pay it off that same day with cash in your bank account. You never pay a dime of interest and get both a credit history and free stuff. But hey, ignore the facts, and screw yourself over if you want to remain ignorant to being a responsible adult.

 

I'm intrigued. Where do you live? I've lived in New York, California and Massachusetts, but for services like gas, electricity, cable, Internet, and a home phone , you don't need credit nor does credit disqualify a person from acquiring these services.

[sanctified Veteran]

People seem to be ignorant to how credit works in the US. If you want to get electricity and water turned on, step one, check your credit. Don't have a credit history, that's fine. Just pay 2 to 3 months worth of bills as a nonrefundable deposit that never gets applied to your account. What's a few hundred dollars. Want a phone, cell or land line? That's fine to, pay another non refundable, non usable deposit. Want a buy a house, no problem, just pay a 20% down payment to qualify for a high interest home loan. Can't afford it? That's fine, just rent. But first, pay a few months rent up front, assuming they allow you to move in at all with no credit. The fact is that without a credit history in the USA, you will loss thousands upon thousands of dollars even though it costs nothing and has no risk involved to built a credit history. Fun fact of the day, get a credit card with rewards. Use it to buy everything and pay it off that same day with cash in your bank account. You never pay a dime of interest and get both a credit history and free stuff. But hey, ignore the facts, and screw yourself over if you want to remain ignorant to being a responsible adult.

 

 

Some of these post just make me laugh. Everyone in the states needs some form of credit if they want to have a successful career and life.

 

These, to me, seems for like the bleak state of capitalism you're submerged into than the advantage of benevolent credit you two seem to be promoting.

[ANON86364]

 

I'm intrigued. Where do you live? I've lived in New York, California and Massachusetts, but for services like gas, electricity, cable, Internet, and a home phone , you don't need credit nor does credit disqualify a person from acquiring these services.

 

I can vouch for his testimony, at least for where I live. When I setup an account with FPL (electric company), they check my credit to determine if they would require a deposit. The point only being that good credit has benefits and the people who don't understand this are probably the same people who don't understand how certain people get ahead of them in the world.

[threetonesun]

I'm intrigued. Where do you live? I've lived in New York, California and Massachusetts, but for services like gas, electricity, cable, Internet, and a home phone , you don't need credit nor does credit disqualify a person from acquiring these services.

 

You probably do have one, actually, it's just internal to the company. National Grid used to keep track, I only know because one roommate forgot to transfer responsibility on to the next and then their "rating" with National Grid went in the tank. It was a score reported on the monthly bill. That said, I don't know that it ever caused them any problems getting electricity turned on at their new place.

 

More to the point, I buy everything on credit. I have a card that gives me 3% back to use at my car dealership, which means that I've never paid for service on any of my cars, and I even had enough saved up to put a sizeable down payment on a car that I financed (at 0%).

 

Credit is great, if you know what you're doing.

[AJerman]

Credit cards are absolutely unnecessary. But at the same time, they aren't a terrible thing, so both sides are right to an extent. Do you know how many things I pay for that go towards my credit? All of my bills, student loans, car loan, etc. You don't need a credit card to build credit in the slightest bit, so that argument is just silly. On top of that, 99% of the time you can use a debit card in place of a credit card, only difference, you just have to already have the money. That said, if you can have a credit card and pay it regularly and on time, then they aren't a bad thing at all, and do provide additional help to your credit.

 

I don't have a credit card right now because I simply don't need one. I have my Amazon store card which is basically a credit card, but I don't have a standard VISA or MasterCard. I got hit with the recession pretty hard myself. Lost my job for a while, moved back with my parents, was broke, all that good stuff. So now I am very careful about what I spend and when. I'm not scared of credit, I have a car loan and all that, but I have no need for a credit card and my credit is recovering just fine.

 

I've built more credit off paying my student loans than I have off any credit card. They are why I had a 700+ credit score at 22 or 23 years old. Too bad it's not still there after losing my job for so long, haha.

[MandateOfHeaven]

You probably do have one, actually, it's just internal to the company. National Grid used to keep track, I only know because one roommate forgot to transfer responsibility on to the next and then their "rating" with National Grid went in the tank. It was a score reported on the monthly bill. That said, I don't know that it ever caused them any problems getting electricity turned on at their new place.

 

More to the point, I buy everything on credit. I have a card that gives me 3% back to use at my car dealership, which means that I've never paid for service on any of my cars, and I even had enough saved up to put a sizeable down payment on a car that I financed (at 0%).

 

Credit is great, if you know what you're doing.

 

I'm actually living in Massachusetts now. National Grid never disqualified me from getting services even though I did have bad credit a few years back, nor did they report me to the credit bureau when I made payments late. The only time it'll show on my credit report is if I fail to pay a bill for maybe 3-4 months, then it goes to collection which would show on the credit report.

[+LogicalApex MVC]

You already get that with a Visa Debit card and your accounts area already protected under standard EFTPOS fraud protection along with other protection. The only benefit you gain out of a credit card is a line of credit which for many people is too tempting to use thus to avoid the temptation they don't have it at all.

 

Not in the US. If you report it slower than 2 days after the incident you're liable for $500...

 

Additionally the money you may need for bills is tied up in an investigation. My CC doesn't have these issues...

 

http://www.consumer.ftc.gov/articles/0213-lost-or-stolen-credit-atm-and-debit-cards

 

Credit cards only are a problem for the undisciplined, but these persons have the same issues in an all cash environment. They will still be floating check to check.

[ILikeTobacco]

I'm intrigued. Where do you live? I've lived in New York, California and Massachusetts, but for services like gas, electricity, cable, Internet, and a home phone , you don't need credit nor does credit disqualify a person from acquiring these services.

Nobody said anything about being disqualified for getting service. They still give you the service, you just have to pay a deposit for the service. When I got the water turned on at my new apartment a few months ago, they ran a credit check without even asking, then said I had to pay a $100 deposit to get the service turned on. The sad thing is, the 3 major credit companies all have me with a 700+ credit score but the water company claimed when they ran it, it was only 540 because they checked my credit from a state company, not the national ones. Of course its all about making an extra buck, however, that is not abnormal practice to check your credit for anything that requires a monthly bill.

[MandateOfHeaven]

Nobody said anything about being disqualified for getting service. They still give you the service, you just have to pay a deposit for the service. When I got the water turned on at my new apartment a few months ago, they ran a credit check without even asking, then said I had to pay a $100 deposit to get the service turned on. The sad thing is, the 3 major credit companies all have me with a 700+ credit score but the water company claimed when they ran it, it was only 540 because they checked my credit from a state company, not the national ones. Of course its all about making an extra buck, however, that is not abnormal practice to check your credit for anything that requires a monthly bill.

 

What state/jurisdiction do you live in?  I've had bad credit up until a few years ago, but the utility, cable, and home phone companies never asked for a deposit at all.

[ShareShiz]

Credit Cards are dumb. Cash and Debit for the Win.

 

And if you can't afford it. You most likely don't need it.

[ILikeTobacco]

What state/jurisdiction do you live in?  I've had bad credit up until a few years ago, but the utility, cable, and home phone companies never asked for a deposit at all.

So far, had similar experiences in Kansas, Florida, Oklahoma, Mississippi and New York. These are all for apartments mind you so it may differ for a home owner since they had a major credit check just to get the house.

[MandateOfHeaven]

So far, had similar experiences in Kansas, Florida, Oklahoma, Mississippi and New York. These are all for apartments mind you so it may differ for a home owner since they had a major credit check just to get the house.

 

Maybe that's why.  Four out of the Five states are red states, which tends to allow greater personal and economic freedom than blue states like Massachusetts.