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Younger Americans increasingly tending to avoid credit cards

The use of credit cards by people in the 18-to-29 age group -- the so-called "millennials" -- appears to be significantly less than generations of Americans who have preceded them. Why that is, and its effects both positive and negative, is having an impact on the lives of these consumers in New Jersey as well as elsewhere.

That the millennial generation seems more wary of credit card use than Americans in general is evidenced by the fact that almost two-thirds of them do not have a credit card. This is the inverse to the proportion of people 30 and older, about two thirds of whom do have at least one credit card.

The reasons for this seeming aversion to credit cards are multiple. The number of credit card holders overall has fallen slightly in recent years; traits relevant to millennials include coming of age during what has become known as the "great recession," which has made many of them reluctant to go into consumer debt; heavy student loan debt is another reason. This combination has led many younger Americans to use debit cards instead of credit cards.

Finally, the same recent federal legislation known as the CARD Act meant to help consumers in general has also made it harder for those under 21 to acquire a credit card.

The millennial generation may be discovering, though, that their distaste for credit cards can be a mixed blessing. While it is impossible to fall behind or to miss a payment when one does not owe money on a credit card, responsible credit card use remains one of the cornerstones of a good credit record.

Many home and auto lenders, for example, tend to treat little or no credit history as being little different from having a bad history; frugality when it comes to eschewing credit cards can lead to being treated as a subprime credit risk.

Moderate use of consumer credit is not necessarily bad, and may even have advantages. But if one ever gets into the financial position of being over-extended with consumer debt, a variety of means exist -- including, if necessary, resort to bankruptcy laws -- to cope with unmanageable debt burdens.

Anyone who finds himself or herself needing advice on how to escape from an untenable credit card debt situation may wish to consult with a law firm knowledgeable in bankruptcy law before making any final decision.

Source: Fox Business, "More Millennials Saying 'No' to Credit Cards," Jeanine Skowronski, Sept. 8, 2014

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