Since the end of the recession, consumers of all ages have made significant progress in trying to get out from under the debts they held for long periods of time, but none have been more successful in this regard than those between the ages of 18 and 29 years old.
The average balances across all accounts carried by the nation’s youngest borrowers stood at $32,587 through the end of October 2012, down significantly from the $39,408 in the same month five years earlier, according to the latest data from the FICO Banking Analytics Blog. Since that time, average debts for all types of balances (save for student loans) have fallen appreciably, with a special consideration apparently having been paid to slashing credit card debts.
In all, credit card debt declined by nearly a third during this five-year period, slipping to $2,087 from $3,073, the report said. Much of this change came, it seems, as a result of a larger percentage of young people no longer having this type of account in their own names. In all, about one in every six people in this age group is without a credit card, up from only about 12 percent three years earlier, and nearly double the roughly 9 percent observed in 2005. Part of this can be attributed to a portion of the Credit Card Responsibility, Accountability and Disclosure Act, which made it more difficult for those under the age of 21 to obtain an account in the first place.
The percentage of young people without credit cards, predictably, far exceeds those for other age groups, the report said. Only about 8 percent of consumers 30 to 39 years old don’t have these accounts, compared with some 6 percent of those 40 to 49, 4 percent of people in their 50s, and less than 2 percent of people 60 or more years old.
Today, the average college student leaves school with tens of thousands of dollars or more in outstanding debts, most of which are comprised of student loan balances that can be especially burdensome. Adding in credit card debt and auto loans may make it extremely difficult for manyyoung people to gain the financial independence soon after graduation that their parents might have enjoyed, and reduce their capabilities of buying a house for a lengthy period of time.