Why Are Millennials Avoiding Credit Cards?

Why Are Millennials Avoiding Credit Cards?. That compares to only 45% of Americans between the ages of 30 and 49, and 38% of those aged 50-64 without credit cards. The 2009 Credit Card Accountability Responsibility and Disclosure (CARD) Act probably played some part in the decrease by making credit cards difficult to obtain for those under age 21. Unemployment may be keeping some millennials from qualifying for credit, but others appear to be avoiding credit cards as a matter of principle. Debt/Interest Rate – Credit card debt is usually the highest interest rate debt you will incur and if you charge more than you can pay off each month, debt can spiral to unmanageable levels. Ease of Overspending – The flipside of the convenience advantages listed above. Poor Credit Scores – Just as you can build your credit history with responsible credit card use, you can damage it with irresponsible use. Having no credit history makes it difficult to qualify for loans and mortgages, but having a poor credit history increases those difficulties. The most responsible path is to use cards sparingly, pay them off in full each month, and stay at a small fraction of your credit limit (10% or less if possible). Avoiding credit cards is advisable if you cannot use them responsibly.

Credit card usage is dropping among the millennial generation. A surprising 67% of Americans between 18 and 29 years of age have no credit cards at all, according to a recent survey. That compares to only 45% of Americans between the ages of 30 and 49, and 38% of those aged 50-64 without credit cards. At 32%, even less Americans aged 65 and over are without a credit card.

The 2009 Credit Card Accountability Responsibility and Disclosure (CARD) Act probably played some part in the decrease by making credit cards difficult to obtain for those under age 21. Whopping levels of student debt also play a role, as millennials are wisely afraid to add more debt to their loan obligations.

Unemployment may be keeping some millennials from qualifying for credit, but others appear to be avoiding credit cards as a matter of principle.

Given America’s soaring credit card debt, that is a positive development… or is it? Consider some of the potential advantages of credit card use.

  • Building Credit History – Without a credit history, lenders have no way to evaluate your risk when the time comes to buy a car, a home, or any other large purchase requiring a loan. You will be charged higher interest rates, as a result, until you prove your risk level is low.
  • Purchase Protection – As opposed to cash purchases, credit cards offer protection against vendor fraud and stolen items. You also have means for disputing fraudulent purchases made in your name.
  • Convenience – Credit cards are convenient and accepted at most vendors, whether brick and mortar or online. (Arguably, this is a negative if you have poor self-control.)
  • Record of Expenses – Monthly credit card summaries provide you with…
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