Younger Americans Passing on Credit Cards

Young people in America are changing their ways when it comes to personal finances. They are also being more careful and are considering the advantage of an online background check or investigation before engaging in any financial risk. While credit card debt has been a rite of passage over the last few decades, a new trend is emerging. After the economic downturn of 2008, more young people have run away from credit cards. According to a report from FICO, nearly 16-percent of consumers ages 18 through 29 lived without a credit card at the end of 2012. That’s a huge increase in people doing away with the cards, as that number was well below 10-percent just a few years ago. To put it simply, more young people have found that credit cards represent a high level of risk.

This change has had a significant impact on the amount of credit card debt that young people hold today. The average credit card debt held by consumers in that age range has dropped from just more than $3,000 to just more than $2,000. Some have suggested that this movement is a natural response of these young people to what they’ve seen in their parents. Many young people have seen the older generation fall under the huge burden of credit card interest, and they’re running away. In addition, many young people have found useful alternatives to credit card debt.

Pundits add that this change has been aided by recent legislation. In 2010, the federal government passed a law that requires people under 21 to have a co-signer or have their own independent income in order to get a credit card. In the past, credit card companies had sought out young people at colleges, looking to exploit those people with cheap offers. These offers have dried up, and the only people taking out credit cards at age 19 today are those people able to pay their debts.

Many young people have experienced a beneficial side effect of taking out less debt. These young people have less mortgage debt, and as a result, many are clocking in FICO scores higher than 750. In fact, around 12-percent of consumers 18 through 29 have those high scores. This number represents a significant increase since 2005.

While the news is positive for young people in America, the debt picture isn’t so good for older individuals. Consumers over the age of 40 have also decreased their credit card debt. These people have countered their lower credit card load with higher mortgage amounts and significantly increased auto debt. This burden has caused credit scores to decrease for people in this age group.

Likewise, many point out that with the job market tanking for new graduates, older Americans are taking out more credit and stretching themselves financially to support their children. While young people are enjoying the benefit of financial freedom, some of the burden has fallen on the shoulders of their parents. Those sacrifices have been significant, and they represent a new normal for all Americans today. Until the job market improves, this situation figures to get much worse among the young and the old.  You may want to seek further vice from this site about bad credit credit cards.

Leave a Reply