Young adults avoiding credit cards

Teenagers and young adults living in Mississippi are often accused of being irresponsible, whether it comes to decisions they make in social settings or those regarding their financial matters. However, a recent report challenges this stereotype as it relates to young adults and their credit card debt.

FICO, a public company the provides credit scores, released a report earlier this summer about young adults aged 18 to 29 and their credit card use. Surprisingly, young adults appear to be more conservative in their credit card use and have generally lower credit card debt. 16 percent of young adults do not have a credit card at all -- a number which has grown by seven percent since 2005. In contrast, the amount of debt for this age group has decreased. The average debt is about $1,000 less than it was five years ago: decreasing from nearly $3,000 to $2,000.

There are many reasons for the change. There appear to be social pressures as well as influence from the recession. Young adults in Mississippi as well as throughout the country are more conservative in their spending and are foregoing some luxuries, even cars, and especially in urban areas.

The law has also had an impact on young adults and their credit card use. The Credit Card Accountability Responsibility and Disclosure Act (CARD) of 2009 has specifically had the greatest impact. The CARD act actually makes it more challenging for someone under 21 to get a credit card. Individuals failing in this age group may need a co-signer or have to prove a certain amount of income.

Whatever the cause, there has clearly been a shift in young adults' credit card use. This change will hopefully aid them as they begin to tackle the financial challenges presented by adulthood.

Source:, "The Huge Mistake Millennials Are Making With Their Money," Dan Caplinger, July 21, 2013

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