Home > 2014 > Credit Cards

Why These Millennials Don’t Have Credit Cards

Advertiser Disclosure Comments 0 Comments

If you ask a young consumer about the contents of his wallet, there’s a pretty good chance he’ll tell you he has a debit card in it, if a recent survey is any indication. The prevalence of ecommerce and mobile banking practically makes it a necessity to have a payment card of some kind if you want to engage in the modern economy, but among the youngest adult generation, debit cards are the favorite.

Millennials — people define the group differently, but it’s generally people ages 18 to 30 or 35 — favor debit cards not because they don’t want to build credit or can’t qualify for credit cards, rather they tend to have an aversion to the idea of debt. Millennials started their adult lives during or in the wake of the financial crisis, in which debt emerged as a devastating villain to be avoided at all costs in the future.

A survey from Bankrate and informal interviews with young consumers support that idea: Many young consumers have been convinced by economic conditions that credit cards are bad.

Millennials Don’t See the Need for Credit

Well over half (63%) of consumers ages 18 to 29 do not have credit cards, a survey commissioned by Bankrate found. The data is based on an August survey conducted by Princeton Survey Research Associates, which interviewed 1,003 adults living in the continental U.S. The data has a margin of error of plus or minus 3.5 percentage points. In comparison, only 35% of those surveyed older than 30 were without credit cards.

In interviews with millennials, the topic of using debit cards to avoid debt surfaced again and again.

Elliott Everson, 20, said he’s thought about getting a credit card, but he isn’t really motivated to make it happen. He’s used a debit card since graduating high school.

“I think I’ll get too used to swiping and not thinking about it,” Everson said about using a credit card. “They say credit cards are bad.”

Even though he’s wary of falling into debt, Everson said his stepfather suggested he open a card for small expenses so he can build credit (he has no credit history, he said). Still, he’s happy sticking with his debit card.

Twenty-six-year-old Vinita Rana doesn’t like the idea of potentially spending more than she should, either. She recently moved from India to the United States last year, and she has only ever used a debit card in either country.

“Sometimes, we spend more than we want to,” she said. “With a debit card, you can’t spend what you don’t have.” She thinks she’d like a credit card in the future, though, perhaps for convenience or for financing a large purchase.

Credit & Debt Aren’t the Same, But It Sometimes Seems That Way

Aaron Dicker, 26, had a credit card when he was in college, but the issuer closed it due to inactivity. He used it to buy something once, paid off the balance immediately and never used it after that point.

“I always just had a debit account, and I don’t overdraft,” Dicker said. “I spend in my own limits, and I don’t need credit.”

It hasn’t been an issue for him. He’s established a credit history through paying student loans and an auto loan, so for him, there’s no need to get a credit card when a debit card adequately serves his needs.

At the same time, just because you use a credit card doesn’t mean it needs to be a source of debt. If you pay off the balance each month (like Dicker did with that first credit card), the purchases have no different effect on your bottom line. It’s only when balances carry over that they accrue interest and sometimes perpetuate a habit of spending beyond your means.

Plenty of people learned that the hard way.

Ann Badertcher, 32, doesn’t use her credit card anymore, because she racked up a lot of debt using it after college.

“I thought it was free money,” she said, voicing an unfortunately common misunderstanding among credit card users. She doesn’t have credit card debt now, and she uses a debit card because it keeps her on budget. She keeps the card open to build her credit.

Gina Selent, 29, made a similar credit-to-debit switch. She’s been using only her debit card for two months now, because she’s trying to pay down credit card debt and improve her credit standing.

“I had gotten a little carried away,” she said. She said she tended to buy “silly things” with her credit cards, so she committed to paying them off. She knows she should keep using them to maintain her credit history, but it’s not that simple, she said.

“People say you want to use it often to build credit, but I just go overboard,” Selent said. “With a debit card, if you don’t have money on there, you can’t just say ‘Oh, hey’ and swipe.”

Finding Ways to Use Credit Responsibly

In a collection of interviews, Millennials stood by the strategy of using a debit card to control spending. It’s certainly a good way to keep track of your money, and there are no bills to worry about paying (and the fees and interest that come when you’re late with a credit card payment).

Still, credit cards can be very helpful tools, particularly for consumers trying to build credit from scratch. There’s no need to carry a balance on your credit card — actually, that can hurt your credit scores — and you can do as little as set up a small automatic payment with your credit card to establish a solid payment and credit-use history. For example, pay your Netflix account with a credit card, and set up your bill payment to automatically debit your checking account every billing cycle.

Credit cards may not be for everyone, but avoiding credit cards out of fear isn’t necessarily a winning strategy for Millennials, either.

No matter what your approach to building credit (even if you have no credit history, or think you don’t have one), it’s still very important to pay attention to your credit reports and scores. Pulling your credit reports is a good way to find any mistakes or issues that you need to address, and always, the sooner the better. Your credit scores are also an excellent barometer to what’s going on in your credit reports, too, so if you see a problem with your credit scores, look to your reports. Consumers are entitled to their free credit report every year through AnnualCreditReport.com, and Credit.com lets you see two of your credit scores for free, updated monthly.

More on Credit Cards:

Image: Brand X Pictures

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team