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The Young and the Cardless

My admittedly kitschy title highlights a new trend that we’ve observed after analyzing credit behaviors across different age groups: more young consumers are forgoing the use of credit cards.

First, let’s look at a breakdown of outstanding debt for consumers in the 18-29 age group between October 2007 and October 2012. Except for student loan debt, these consumers have reduced their outstanding debt across all categories.


While the growth in student loan debt garners a lot of attention, the fairly dramatic reduction in credit card debt is also enormously noteworthy. Lower credit card debt is not only associated with consumers carrying lower balances on their cards, but more consumers not having any credit cards in general.


As the chart above illustrates, over time there’s been an increasing number of consumers within each age group that no longer have a credit card. This change is most dramatic among younger consumers.

This trend can be attributed to two main influences. First, the CARD Act has put more requirements on issuers before a card can be issued. In order to open a credit card account, for example, consumers under 21 need to show an ability to pay off the debt or have a co-signer on the card.

Secondly, the impact of the recession seems to have had a pronounced effect on young consumers’ attitudes toward credit. These results are consistent with reports indicating that younger consumers are more likely to use debit cards instead of credit cards for purchases. They may also reflect the growing use of mobile payments by this younger generation.

As more young consumers eschew credit, credit card issuers may need to rethink established lending strategies for attracting and building relationships with these consumers. As part of that, issuers may benefit from supplementing traditional credit data with new data sources to develop more refined marketing and risk management tools for this dynamic demographic group. This will allow them to grow their portfolio responsibly and stay relevant in an increasingly competitive and changing landscape.

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John Haver

I feel more confident without credit cards. I think nowadays people spend wo thinking, if you actually see the cash available it makes you more aware of your spending.


Well it is easier to get student loans because no credit is needed. I would rather them have credit card debt because when they default on their student loans the rest of us have to pay for that with tax dollars.

notnecessarily a bad thing

Not necessarily a bad thing they don't have credit cards or can't buy a house. Truthfully at owning my first house, it will be the last one I ever own. I plan on renting after this one. I plan on being debt free by the time I even hit 43. My future is buy what I need, not what I can't afford.

I like the realtor commercial "Home buying is an investment in the community." Uhh... no.. That just makes realtors money, and in an ever changing (and not growth) job market, having a house can kill your career these days.

The Truth

Is there any empirical evidence that proves young consumers are eschewing credit cards? How do we actually know youngsters are choosing debit over credit? It may not be by choice, but rather necessity.

Could it be that issuers are denying more applicants these days? I haven't seen an attitude shift with regard to credit card use, which makes me believe it's only more stringent underwriting at play.

Frederic Huynh

While I don’t deny the fact that strict underwriting is at play, you’ll be hard pressed to convince me that the economic uncertainty that has impacted the younger generation is not influencing their approach to using credit – just look at the unemployment rates they are seeing compared to the older age groups. The truth is often found somewhere in the middle and not at the extremes. We definitely see that young consumers have fewer inquiries today than previously. That is informing us that they are not shopping for credit at the same rate that they were previously. This can be attributed to a number of things – the FACT Act, less aggressive marketing, etc. But keep in mind that these observations are made at a time where we are reading more reports of young consumers in urban areas are electing not to buy a car (and the corresponding auto loan that comes with it), young consumers have increased student loan debt loads, young consumers putting off to buy a house, etc. Connecting all the dots together, it’s hard to pin everything to stricter underwriting.

Ryan Hart

I think the main reason there's an increase in young consumers with no credit cards is because of more stringent requirements - not necessarily attitude. More data is needed to support your argument on the change in attitude.

Frederic Huynh

Ryan: Thanks for the reading the blog and for your comment! I certainly agree that the more stringent requirements in credit originations are a driving factor in younger consumers ditching their credit cards. However, we observe that the number of young consumers who are actually looking for credit has actually decreased. Specifically, in October 2007, about 66% of the young consumer group had at least one inquiry on their file. In October 2012, 55% of this group has at least one inquiry on their file. These inquiries can certainly be influenced by marketing practices, but the hard inquiries that we measure is a reflection of an inquiry posted as a result of a search for credit, so this is one bit of supporting evidence indicating that they are not searching for credit as much. We’ll be posting some updated statistics soon.


An interesting angle here might be the credit card use in Europe. Although it is quite common in the US, here in Holland it is not that main stream. I myself only use one when going outside the border. Most young people here do not have a card until they need it for travel.
So this is a problem that might be just anchored is America culture?


Hello Mr. Huynh,
I was wondering if you could please clarify something regarding the chart that was recently posted, titled Climb Your Way to Become a FICO Score High Achiever.

The chart says that High Achievers have an average balance of $8,500 on their "credit cards" and that Improvers have an average balance of almost $25,000 on "credit cards".

$8,500 seems excessive for a High Achiever's credit card debt. I have read in the past that High Achievers have closer to $600 in revolving debt.

Did the people who produced the chart mean to say "non-mortgage" balances, instead of "credit card" balances. Or does a High Achiever really carry an average of $8,500 in credit card debt?

Thank you in advance for clarifying,

Credit Card Builders

I think this article is good but didn't get exact meaning of writing this article.


I`m not buying this about young consumers having less credit cards. The recent studies online have shown exactly the contrary I think.

Clark Stan

Dunno if it's true, but if the info is correct and the trends are the same, more and more youngsters will look into Bitcoin and similar currencies instead of the plastic CC.

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