Answer: 37% which is lowest percentage since data was collected started in 1989 (from NY Times based on Federal Reserve data)

From the article:

“Only 37 percent of American households headed by someone aged 35 and under held credit card debt in 2013, the most recent year for which data from the Survey of Consumer Finances is available, down by nearly a quarter from immediately before the financial crisis. That statistic may undercount young cardholders to some extent, as it excludes people under 35 who live with their parents.

But more 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.”

Implications:

“Credit cards are frequently necessary for the bigger purchases — like washing machines and computers — that can make households more efficient and help the economy grow. And credit cards are usually an essential part of the credit history that allows someone to borrow to buy a house.”

Three reasons for the aversion to debt:

The reasons for the shift are varied: Like Ms. Liebman, 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, the Fed data shows.

On a more practical level, laws passed after the financial crisis made it much harder for younger people to secure cards unless they could prove they had the income to pay the bills. The tents that credit card companies used to pitch all over college campuses — offering students free T-shirts when they signed up for cards — have largely disappeared.

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.

Here are some great follow-up questions to ask your students about this resource:

1. What are some ways in which waiting to get a credit card could negatively impact a millenial in the future?
2. Do you currently have a credit card? If not, do you think you will get one in the next few years? Why or why not?
3. If you have a credit card account currently (or if you decide to open one), what are some things you will need to think about to manage your finances?

Want this resource and questions in slide format to use in class? Click here!

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Check out this NGPF Activity: Should They Open A Credit Card?

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

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