Millennials are not owned by credit cards

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Data from the Federal Reserve indicates that the percentage of Americans under 35 who hold credit card debt has fallen to its lowest level since 1989, when the Fed began collecting data in a standardized way…

Some older Americans have also been shedding credit card debt since the financial crisis that began in 2008. But for no other age group has the decline in the proportion holding credit card debt been more rapid than it has been for young Americans…the data from the Survey of Consumer Finances shows.

Their reluctance could have lasting repercussions for millennials, as well as for the financial system and the economy. Early use of credit cards has, in the past, helped young Americans develop a comfort level with credit that can last a lifetime and lead to a succession of big purchases financed by debt. Without a substantial credit history, it is much harder to take out a home mortgage, for example…

The resurgence of overall credit card use in the United States over the last year or two has been driven largely by subprime borrowers, according to the Federal Reserve…

But it is clear to economists who study payment patterns that millennials are gravitating toward payment methods that skirt both cash and credit. Why carry cash when you can whip out a debit card for the smallest transaction — a sandwich or a bottle of soda — or use an app like Venmo or an online payment service like PayPal? All of those typically draw funds directly from a bank account…

Recent data has also suggested that millennials are using credit cards less than people of a similar age did in the past — and that they are taking on fewer auto loans and mortgage loans than people of similar age did before the financial crisis.

Many young people carry burdensome loads of student debt, making it hard for them to take on any more debt — and giving them a sour taste in their mouths when it comes to credit of any sort. The average American under 35 now has $17,200 of student debt, 182 percent more than Americans of the same age had in 1995…

Then there are the young professionals who are able to get a card, but have seen the strain that debt put on their families and friends during the financial crisis.

There just may be another quality involved. I have no study at hand to prove it – but, I’m beginning to believe in what I call the George Carlin effect. That is, lots of young people already feel they have enough “stuff” without owning a car or a house.

Guess I’ll have to suggest the question to someone reliable – like the Pew Foundation. Maybe they’re already asking the question?

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