Tips and Advice

Young Adults Are Choosing Debit Cards Over Credit Cards

Young people are now using debit cards instead of credit cards, withdrawing cash for purchases to avoid going into debt.
bank debit cards
Written by:
Rachel Lewin
Edited by:
Kristin Marino verified

bank debit cards With the reports of student debt and the difficulties faced by current college students and graduates when it comes to repaying their loans, more and more young adults (those between the ages of 18 and 24) aren’t applying for credit cards. With the federal government currently holding over $552 billion in student loans, it’s no surprise that this age group is cutting back.

According to a survey conducted by Sallie Mae, the student lender, and Iposos Public Affairs, a market research company, only 39 percent of undergraduates in the young adult demographic owned a credit card lat year. This number is down from 49 percent in 2010. Young adults are displaying a reticence to apply for credit cards or to use the ones they may already have for fear of going into further debt.

Of those surveyed, those who had credit cards are using them less, carrying smaller balances. According to the Federal Reserve, the median balance in 2010 was $1,700; in 2001, the median was at $2,500 for the same demographic.

A result of the reluctance to use credit cards is the lack of a credit history for people in that age bracket. A newer tactic credit reporting agencies are using is to incorporate phone, rent, and similar recurring payment information into how creditworthiness is calculated. One such model is in place at Experian® with their RentBureau, which was launched in 2010. RentBureau takes on time payments into account to help build a credit history.

While young adults are using debit cards and cash in favor of credit cards, there are still ways available for them to establish the credit history they will need to enter the workplace, lease a vehicle, get a mortgage, all critical elements of economic growth.

Please note that you will need to have Adobe® Reader® installed in order to read the Sallie Mae and Ipsos report, as well as the Federal Reserve bulletin.