Since the recession of 2008, the number of people age 18 to 29 who do not have even one credit card in their name has doubled. Sixteen percent of young adults don’t use credit, according to a study by credit analyst firm FICO, which studies millions of credit report and assigns consumer credit scores. In 2007, only 8% of that same demographic did without credit.
Since they don’t use credit as much, debt has gone down as well among this new group of young adults. The average amount of credit card debt among the 18-29 set is now $2,087 per person, down from $3,073 in 2007. As debt has decreased, credit scores have climbed. The average credit score for this group has risen accordingly since the recession, with 11.2% having scores over 760. Anything over 760 is considered excellent credit. In 2005 only 8.6% of people ages 18-29 had excellent credit scores.
FICO researchers say this decrease in credit card popularity may be due to kids watching their parents struggle with heavy debt loads after the recession hit. Reluctant to rely on credit like their parents did, recent college graduates are opting to use prepaid cards and debit cards instead of credit cards.
Another factor is the Credit CARD Act of 2010, which made it more difficult for people under age 21 to get credit cards. Credit card issuers, which used to set up tables on college campuses and offer incentives for young people to sign up for their products, are now prohibited from marketing on campus. Students under 21 must also have a co-signer to open an account, something that was not required before the CARD Act went into effect.
With prepaid cards becoming more and more popular, even taking the place of traditional checking accounts, credit card use may continue to decline among young people, says FICO. As they become used to using available funds to make purchases instead of the “buy now, pay later” credit card model, credit cards may have to do more to attract younger customers. Things like travel rewards, cash back, and other incentives are one reason younger consumers may be tempted to sign up for credit card accounts. The popularity of mobile payments may be a factor in attracting this demographic as well, as credit cards adapt to the virtual wallet revolution.
Read Also Related News
Recently U.S. News & World Report - a multi-platform publisher of news and information, conducted an online credit card debt survey with more than 1,000 adult respondents. It turned out that a huge number of American cardholders were...
Tis the season to spend money we may not have on things we may not need. As the winter holidays approach, many kids are preparing their letters to the North Pole and dreaming of the presents they hope will be under the tree on Christmas...
If you’ve ever had trouble making – and sticking to – a budget, you’re not alone. A recent survey showed that while 92 percent of Americans believe everyone needs a budget to keep their finances in order, only 70 percent are...
I need a credit card with a 0% APR to consolidate several of my credit cards into one payment. Please advise what card I can apply.
There are special credit cards that allow consolidation of other cards’ debts - the balance transfer credit cards. These cards usually come with a 0% intro APR on balance transfer offer. The zero introductory period varies, but as a rule it is between six months and two years. So you can find a credit card with...
The easiest way to find out if you have credit accounts under your name is to request a copy of all your three credit reports: Experian, Equifax, and TransUnion. The reports contain information about active credit accounts, its issuers, and the information about credit accounts balances. If you want to protect yourself...
To set a PIN on your credit card, you should call the credit card issuer at the number on the back of your credit card and request your PIN. After that, the issuer will mail to you your PIN. In the meantime, if you need cash, you can go to a bank office and present your credit card and picture ID.
The overall process of getting a credit card can take up to 30 business days. To know the status of your credit card applications you should contact the credit card issuer. A quick online search for the bank or credit card issuer's name should turn up a customer service phone number or email address. Banks and credit card...