Credit score provider FICO has released a new statistic showing that young Americans are avoiding credit cards. Since the beginning of the recession, the amount of youths living without credit cards has doubled. At the end of 2012, it was reported that the 16 percent of the 18-29 crowd didn’t own a credit card, up eight percent from 2007. In turn, credit card debt has plummeted by about one-third for the demographic. The average now stands at $2,087 per person compared to the former total of $3,073.
Debit cards are now becoming popular as the younger crowd has seen first-hand how the recession has hit older generations, particularly their parents. Prepaid cards are also increasing in popularity. FICO also discovered that 2010’s CARD Act, which calls for anyone under the age of 21 to require a co-signer or high income to make payments, has contributed to the falling numbers as well. Another benefit coming from the falling numbers of credit card owners is higher credit scores among the demographic. The number of 18-29 year olds with credit scores over 760 has increased from 8.6 percent in 2005 to 11.2 percent in 2012.
Despite the good news for the younger crowd, older Americans are racking up auto and mortgage debt despite lowering credit debt. 40-49 year olds, FICO found, have scores that have fallen 1.7 percentage points. For 50-59 year olds, there was a decrease of 1.8 percentage points and 3.8 percentage points for those over 60.
Entrust your finances with the highly reputable Valley Federal Credit Union by contacting our main branch at 956.546.3108. Feel free to contact another branch nearest you.