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The young and the creditless: Millennials ignoring credit cards

The cash-only lifestyle adopted by many Americans aged 18-29 isn't helping them build the credit they'll want later in life.

By Jun 20, 2013 4:59PM

This post comes from Shelby Bremer at

MSN Money PartnerMore and more young people are opting for a cash lifestyle. By the end of 2012, 16% of Americans ages 18 to 29 didn’t use a single credit card, up from 8% in 2007, according to a study by credit score provider FICO.

Image: Couple and cash (© Big Cheese Photo/Jupiterimages)The study attributes this to the hard-hitting recession’s influence on attitudes toward credit. It also points to the Credit CARD Act of 2009, which, after it took effect in 2010, required people under the age of 21 to have a co-signer or show evidence of sufficient income to qualify for any credit cards.

While this means fewer young people are incurring credit card debt (an average of $2,087 per person, compared to 2007’s $3,073), in the long run, this trend is not without consequences. Although juggling credit card debt with student loan debt and an entry-level salary may be challenging, establishing credit at a young age is arguably crucial to future financial security. The key is being smart about how you first enter and navigate the world of credit.

Don't fall for the wrong credit cards
Though he sees a “vast increase in the marketing of prepaid debit cards as a debt-free alternative” as a contributing factor to this credit-free trend, contributor and credit card expert Jason Steele acknowledges that debit definitely isn’t the only way for young people to pay for their purchases.

According to Steele, “first-time credit card users should look for simple products with low interest rates and fees. These would include cards like PenFed Promise, Chase Slate and Citi Simplicity.”

However, students, recent graduates and young professionals should be wary of offers that seem too good to be true -- they probably are. For example,  saving a percentage of your in-store purchase may seem like a good idea when you sign up for a retail credit card, but opening too many accounts at every store you frequent dings your credit score and can sink you quickly into debt. Shop around for the right card for you (you can use a tool to search for the appropriate card for you with the features you want), rather than snatching up the first offer that comes your way, because you might end up with exorbitant fees or an APR that’s through the roof.

Establishing a credit history
Credit card use doesn’t have to be grandiose to establish a credit history either.

“You can get a single low-limit credit card, pay for small items once or twice a month, then pay it in full to build your credit rating,” says Gerri Detweiler,’s Director of Consumer Education.

Credit accounts and, in particular, paying bills on time and in full, opens doors down the road. Learning to budget and track purchases with a credit card are added responsibilities that pay dividends later in life. Having a credit card in your wallet provides security in case of an emergency, and the Fair Credit Billing Act of 1975 provides credit card users with safeguards against billing errors and fraudulent activity, protections not extended to debit cards. And on top of it all, many credit card companies offer competitive rewards programs that you won’t get with a debit card.

Young American consumers should consider all these factors before deciding to ditch or avoid credit cards, because opening accounts wisely and spending responsibly can pay off, if you spend time searching for the right card that fits your needs, and most importantly, you use it responsibly. Says Detweiler, “Shop for your first card carefully. Ideally, you want to hold onto your first card for a long time since that will help your credit scores."

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If you’re not sure where your credit stands, you can check your credit reports for free once a year at and’s free Credit Report Card to monitor your progress with an easy-to-understand overview of your credit, complete with letter grades and your credit scores.

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Jun 20, 2013 6:35PM
It really is nonsense to say that it's vitally important in one's life to establish credit history. One can live a good life without borrowing money...for anything. That our economy is so credit dependent is why it is also so unstable. Save & spend, rather than borrow & spend should be the way to live. 
Jun 20, 2013 6:06PM

Hopefully others will follow suit.  Debit cards are so much better to be using these days, as long as you have good fraud protection on the card.


My bank doesn't charge any fees or interest on the card.  I can use it to avoid ATM fees by getting cash back at grocery stores. 


Live within your means, people, and you'll be so much better off.  There really isn't a good reason to have a credit card these days, unless you're well off and don't need to worry about getting nickled and dimed to death.

Jun 20, 2013 8:10PM

Told my daughter, no store cards, only one credit card (from the credit union).  Use it to purchase gas or something small and pay it off in two payments.  She's done this since she turned 19 and has a credit score of 798.  She's getting ready to buy her 1st house on her own, and she'll have this accomplished before her 26th birthday.  You don't have to go into debt to make credit, it does help with your car insurance, and some jobs run credit scores on you also.


Be smart, don't charge more than you can pay off in 90 days or less.  I charge my tires on 90 days same as cash and make three monthly payments, same with appliances, and building materials etc.  It builds credit, if you use it wisely.



Jun 21, 2013 5:11PM
You can actually gain a great credit rating without opening tons of credit cards. I applaud anyone who is responsible, not a spendthrift who expects handouts or bailouts.
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