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While are so many Millennials avoiding credit cards?

Adults under 35, the generation widely known as Millennials, are less likely to have credit cards, and therefore credit card debt, than their parents. A recent study by NerdWallet found that almost a third of Americans in the 18 to 34 age range have never even applied for a card.

There are a number of possible reasons for this:

-- Many of these folks grew up seeing their parents mired in credit card debt and don't want to repeat the pattern.

-- The recession of less than a decade ago gave many of them a distrust of large financial institutions that issue many of these cards.

-- It's not as easy for kids starting college to get credit cards as it used to be thanks to the CARD Act of 2009, which requires that you be at least 21 or have a steady income.

-- Annual percentage rates on cards have been rising, reaching a five year high this summer.

-- They've gotten in the habit of using payment apps to make their everyday purchases.

While an aversion to credit cards may seem wise because people are more likely to live within their means if they are paying for things in real time, some financial experts say that it's important to build up a good credit history before you make large purchases like a home. The length of time you have had credit impacts your overall credit score. Without a solid credit history, mortgages and even car loans can be more difficult to get and come with higher interest rates.

Certainly, avoiding credit card debt is good. However, it's important to learn how to use credit cards wisely. Limiting the number of cards you have is one way to do that. So is reducing the credit limit on them. If you're concerned that the limit that came with your card will tempt you to buy something you ultimately can't afford, you can ask the issuer to reduce it. Of course, paying off your cards in full and on time every month can help you avoid unnecessary interest and late fees, maintain a good credit score and avoid serious financial issues.

Source: Deseret News, "Millennials avoid credit cards and their accompanying debt," Sarah Anderson, Aug. 21, 2016

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Bryan P. Keenan & Associates, PC

993 Greentree Road
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