Young Americans Are Ditching Credit Cards

[PNWDweller]

I know that Credit Card companies target College students since they are often starting out with no credit so they entice them with special offers. However, on the same token, I would not be surprised if the number of College Students has decreased since we went into the Recession/Depression we are in now. Instead, I think there are a heck of a lot more older late 20-40 somethings going back to school after they lost their career in whatever field they were in.

[Arpit]

Just ask the millions of Americans way over their heads in debt if credit is a good thing.

Well, no easy remedy for unfortunate circumstances, naivety or stupidity. They're good/useful if used responsibly, but if you can get without one, that's fine too.

[chrisj1968]

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.

all part of the government snooping. before you dismiss my claim, the US government in this example collects all credit card data. what you buy, where, when and the why. you leave a trail of transactions as you go through life.

[KingCracker]

Nothing wrong with having a credit card as long as you pay your payment on time. I never pay the minimum payment either. My card gives me 12 months interest free with purchases over 500 dollars so I always make sure I pay off the balance before the 12 months is up.

[tanybeen]

My current credit card gives me back 6% cash back on groceries, 3% on gas, and 1% on everything else. I pay it in full at the end each month via an automatic payment (so there is no way to skip it). I haven't paid a cent on interest in 2 years, and received more than $1000 from it in rewards. Just don't spend more than you have people, and credit cards are a great thing if used right!

[Buttus]

i hate carrying cash, having to make change, etc, etc... so much eaiser to just swipe the card, and be done with it...

then just make one payment during the month.

[Xerxes]

I've never had a credit card and never needed one (I use a Visa debit card). That said I couldn't get one even if I wanted, as I would be knocked back instantly (I earn below the required income).

[Brandon]

True but then it's too easy to make your available credit sky rocket if you do that.

So? That's good. That means you are using less of your available credit (% wise) which helps your credit rating. 

[slapfacemcdougal]

So? That's good. That means you are using less of your available credit (% wise) which helps your credit rating. 

 

No it means that you'll have a credit card with more available credit than you can afford to pay back. Which is a bad thing.

[webeagle12]

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.

Must..Get... Those.. $4000 rims and max out my credit card

[Brandon]

No it means that you'll have a credit card with more available credit than you can afford to pay back. Which is a bad thing.

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. 

[slapfacemcdougal]

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. 

 

No one is forcing you to use your available credit, but people aren't smart. People are dumb. They do use it and end up in debt for no reason because of it.

[Ambroos]

In Belgium the vast majority of people has no credit card and we do absolutely fine. There are about 3,5 million credit cards on the market in Belgium on a population of over 10 million. I've worked in a phone store (and people in Belgium don't get subsidized prices so always pay the full price for phones) and have only seen four or five credit card payments over all my time working there while debit card payments were at least 20 a day.

 

I just think it's a stupid system. Why risk spending more than you can afford?

 

I have a prepaid MasterCard which is absolutely brilliant, since I can manage it from an app on my phone. Transfers from my account to the MasterCard are instant, transfers back too. No extra costs either. And paying or withdrawing cash with my debit card is 100% free too.

 

For someone living here in Belgium I can't see any advantage at all of having a regular credit card over just a debit card or a prepaid MasterCard/VISA.

[Axel]

Being responsible and having a credit card is a good thing.  It also makes it a lot easier to organise finances, but that's a personal thing.  In my opinion anyone who doesn't use one if cheating themselves or has issues with self control... here's why.

 

There are plenty of credit cards out there which either offer cashback, or some sort of rewards system. Lets say I spend ?1000 month on a credit card.  Typically its a 1% reward on what you spend so you earn 1 point per ?1 and 1 point equates to 1 penny. 1000p = ?10 per month.  But the end of the year you're looking at a ?120 reward for just spending... you wouldn't get that with a debit card or cash spending.

 

So I seriously can see no logical reason for dismissing credit cards unless you have issues with self control?  Please enlighten me if I'm being ignorant???

I just think it's a stupid system. Why risk spending more than you can afford?

 

Where's the risk? Why would you be short sighted enough to spend more than you earn or more than you can afford - do you not budget yourself? 

 

I just thought of another thing - credit cards cover you in circumstances where you may lose money.  i.e. bought and not received an item from a company who has gone into administration.

[matt4pack]

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:

 

 

You do realize you can pay off your balance every month on a credit card don't you?  Not only that but you can also get a reward card that pays you for using them so really it's pretty dumb to not be using a credit card.  Although I guess if everyone started doing this they wouldn't offer it any more as the people who pay interest end up subsidizing me.

 

That's not even taking into consideration that if your credit card gets stolen and used you aren't losing real money that takes time to get back like if a debit card is stolen.  I only use a credit card and pay it off every month while also getting free cash and discounts on gas in the process.

[Ambroos]

I don't know about the US, but debit cards are useless without the PIN over here.

[matt4pack]

Well my debit card # was used to make purchases in California a couple years back so after that I stopped using it all together.  I don't think you have to enter a pin for online purchases so maybe that's what was happening. 

 

Sure the bank gave me my money back but that takes some time while with a credit card no real money would have been used. 

[sanctified Veteran]

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...

 

I am an plastic arts major, living in my own place with two gold cards.

 

Thanks for the generalization.

[Yogurtmaster]

I think freeing yourself from debt is the best way to fly.

 

If you haven't already, I encourage you to read and take the courses from "Dave Ramsey" with his Financial Peace University.

This is the best thing I have ever done. 

 

My score is 785 from the big three, but I want to get rid of my debt and never go into debt again.  Why would you want to be a slave to anyone?  If anything happens in life and you are in debt you could be in trouble.

 

Instead of getting killed from real life events, save money in a Mutual fund and it wouldn't be bad to also diversify your money too.

[Sylar0]

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

 

 

^ Smart -- Props to them ;)

 

 

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.

Do your parents live in a house made of dirt?

 

 

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.

 

 

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

 

 

You have a good attitude to money, but unfortunately we don't live in an ideal world.

Credit scores don't exist to measure how much debt you have, but are used to show how good you are at handling the debt you have. Institutions such as banks (and places such as letting agents, insurance brokers, etc) will all do credit checks to ensure that you are a worthwhile investment by checking to see if you'll actually pay them back. A bad credit score will set off alarm bells and make it hard for you to get loans, mortgages, insurance (and so on) because you are shown to be bad at handling your debts. If you've never had debt before (through a loan, a credit card, etc), you are a 'closed book'. Banks will often prefer a mortgage applicant with well-managed debt over someone with no debt because if you've never repaid a loan/mortgage, they don't know if you could handle the repayments.

The credit score will obviously be only part of your application checks, but it helps immensely if you have a good one. In my case, I was in a similar position to that which you describe at the start of this year (plenty of income, no credit cards or debts) and I wanted to get a loan to buy my new car. My girlfriend was also buying a car (we needed new ones to replace our bangers) and applied for her own loan as well. She currently has a well managed debt structure with a couple of paid off credit cards and mortgage on a house (not ours, which we rent). We applied for almost identical loans, and because of her high credit score, the bank gave her a 1.5% decreased interest rate on her loan. Hence I, with no debt, got 7.9%, and she got 6.4%, which works out around a few hundred ??? in savings over the course of the loan.

Two examples of why it may be desirable to have a good credit score:

• Applications for Mortgages and Lettings BOTH require credit checks, better credit scores will allow you to secure a rental application or your mortgage. So if you need somewhere to live, its better to have a good credit score.
• "Living on what you earn" is definitely a good attitude, but things can happen which will necessitate you needing to borrow money. In my case, it was to replace a car that was going to break down any day, and I didn't have the money to replace it. Without my car, my ability to earn money is hindered and I risk hurting my income by NOT taking out a loan for a new car. I can pay the loan back no problem, but I needed the bulk cash to get the car initially. That make sense?

Of course, living within your means is a given. No-one should ever, EVER, try to borrow more than they can repay. Before taking out my loan of several thousand pounds for my car, I created tons of spreadsheets, documents, receipts, accountancy documents that I used to determine the suitable amount of money I could borrow. I literally spent weeks preparing to even apply for a loan. Then the bank did the same by analysing my income and expenditure through my bank accounts to ensure that I was responsible with my money.

Don't get me wrong, the whole thing sucks arse, but money runs our lives much more than we'd like, and unfortunately if we want to borrow money (or find somewhere to live, or get insurance, etc, etc) we're going to have to play their silly little game. The key is to not let them win by getting into trouble.

 

 

 

To buy a car for one thing. Unless you buy a car outright you'll need good credit if not then you wont be able to buy one or you'll get a high interest rate.

 

 

That's great, but most people cannot pay outright for things like a house or a car. Having a credit card isn't what's bad or stupid, it's using it indiscriminately. My wife and I have extremely good credit, but we only use our credit cards when we already have the money to pay. This helped a lot since we just moved back to the states and had no problem getting a USDA (read: 3.375%) loan for a house. Aside from our bank credit cards, we have a Kohl's credit account, because you can save a lot when you use it instead of a debit card or cash. But again, we pay it off soon after we purchase something. I never pay any interest on my credit card, only the principal.

 

 

I have a credit card for spending abroad.

In the UK, paying bills and having a mobile phone contract helps towards your credit rating.

Never really use the credit card in the UK as I use the debit card for everything. I also wait until I can afford it before I buy it. I don't really understand people who don't :/

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.

[MandateOfHeaven]

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.

 

Having a credit card and good credit is very important in the U.S.  I'm not sure how it is where you live, but if you want a good paying job in the U.S., you'd need a good credit history.  Having bad credit could potentially disqualify a person from being considered for a job.  

 

Having a credit card or two isn't a bad thing.  You don't have to use it at all.  someone else here mentioned that it's very convenient when renting a car, booking a hotel, etc.  In my twenties, I got a few credit and misused it until I got bad credit.  Now that I have a family, it's very hard to do anything without credit--even renting a house requires good credit.

[Sylar0]

Having a credit card and good credit is very important in the U.S.  I'm not sure how it is where you live, but if you want a good paying job in the U.S., you'd need a good credit history.  Having bad credit could potentially disqualify a person from being considered for a job.  

 

Having a credit card or two isn't a bad thing.  You don't have to use it at all.  someone else here mentioned that it's very convenient when renting a car, booking a hotel, etc.  In my twenties, I got a few credit and misused it until I got bad credit.  Now that I have a family, it's very hard to do anything without credit--even renting a house requires good credit.

 

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.

[tsupersonic]

I can't imagine not having a credit card. I didn't want one when I was 18, but my dad forced it on me. I have excellent credit, got my score a month ago, and it was better than 90% of all Americans, so I'm happy. Just be responsible with your money! 

 

Anyways, yeah, it's important to have a credit card and start building credit while you're young. I just forced a friend I know to open her first credit card at 28 years old, and with no other credit history.  :o

[ILikeTobacco]

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.

[Churma]

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. Like others have said in this thread, do not carry a balance and you can have credit cards work for you. Some examples are dividend cards, airline miles cards, and others. I get cash back on my credit cards and pay zero interest on them as I pay my credit cards off monthly. Why in the world would I want to pay in cash when I can get more for my money. Also with credit cards, it is easier to track your purchases than paying with cash. If a vendor rips you off, you have recourse with credit cards, not with cash. 

 

If your credit card limit keeps getting increased and you do not want that, just ask your credit card company to cap it at the amount you want. 

 

Anyways thought I would chime in on my thoughts...