Our national survey also finds millennials are conflicted about cards: They think they should have them early, yet one in four doesn’t have one
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While more than one in three 18-29 year-olds don’t have a credit card, most Americans believe people should have at least one card in their own name by age 22, according to a new CreditCards.com national survey.
The survey asked 1,000 adults when a young adult should get his first credit card, and the average response was age 22, with the median age of 21. One-third of respondents said 18-20 year-olds should have their own credit cards. Another 3 percent said those under 18 should have their own cards. However, 36 percent of millennials in the 18-29 age range have never had a credit card themselves, the survey found.
The results show somewhat of a divide between what American consumers think and what the federal government thinks. It wasn’t that long ago that Congress passed the Credit CARD Act of 2009, the landmark legislation that made it more difficult for consumers under the age of 21 to get a credit card in the first place. The CARD Act requires those under 21 to have a job or other verifiable source of income to qualify for a credit card, or an adult co-signer on the account.
CARD Act critics had expressed concern that restricting a young person’s access to credit cards would slow down their ability to build a credit profile early. The argument went that the longer you wait to get a credit card, the longer it takes to build a credit history and qualify for major purchases such as a car or a house.
Cards obtained early
Of those surveyed who had a credit card, 47 percent got their first card before they turned 21, though many of them signed up before the CARD Act went into effect. “I think it’s a good idea to start practicing money management as early as possible,” says LaTisha Styles, producer of Young Finances TV, a weekly Web series on millennials and personal finance. Styles says college students can start building their credit by putting a cellphone or other monthly bill on a credit card and then paying it off at the end of each month.
Where survey respondents live also played a role in what they thought.
- Only 46 percent of Americans who live in rural areas said someone should get their first credit card before age 25, compared to 70 percent of Americans who live in urban and suburban areas.
- Rural Americans were also more likely to say you should never get a credit card, with 9 percent feeling that way compared with only 2 percent of urbanites and suburbanites.
One reason for the disparity could be that rural areas tend to have fewer retailers. As a result, those in rural areas may not feel as much of a need for a credit card.
Though the CARD Act makes it more difficult for Americans under 21 to get a credit card, it’s far from impossible. A summer or part-time job could be all some college students need to qualify for a credit card with a low credit limit, points out Betty Riess, a spokeswoman for Bank of America.
I think it’s a good idea to start practicing money management as early as possible.
|— LaTisha Styles|
Producer, Young Finances TV
Card issuers are also targeting certain credit cards with lower limits toward college students. The terms of such cards evolve as consumers get older and their income and creditworthiness grows.
Millennials wary of credit cards
Still, the poll indicates young adults — hammered financially by both the Great Recession and unprecedented levels of student debt — remain ambivalent about credit cards.
While millennials are the least likely age group to own cards themselves, they also felt most strongly that your first card should come early in life.
- Nearly six in 10 (58 percent) poll respondents ages 18-29 said the first credit card should come by age 20. Just 23 percent of the respondents over 50 said cards should be acquired that early.
- Among all age groups, a large majority (82 percent) said that by age 30, you should have your first credit card. But there were a few holdouts: 7 percent said to wait until you’re in your 30s, 2 percent said to hold out until you’re over 40.
- Three percent volunteered that people should never get credit cards.
The co-signing alternative
Young borrowers who don’t have cards could get a co-signer, but that has its own dangers, experts say. “You have to think about the worst-case scenario,” says Bruce McClary, spokesman for the National Foundation for Credit Counseling, says. If the person under 21 is not able to make the bill payments, “How quickly would you be able to jump in and manage the repayment of that debt?” Co-signers are legally responsible for paying debts if the borrower doesn’t.
Like all consumers, young people getting their first card should make sure they understand the terms of the agreement, and that they use the card wisely, preferably paying the balance off in its entirety each month.
Whether they are signing up for their first card at 18, 25 or 40, they also should make sure they have a real need for the credit, McClary says. “Make sure you’re opening it for the right reasons.”
Princeton Survey Research Associates International conducted the poll April 1-5, 2015, on behalf of CreditCards.com. PSRAI obtained telephone interviews with a nationally representative sample of 1,000 adults living in the continental United States. Interviews were conducted by land line (500) and cellphone (500, including 288 without a land line phone) in English and Spanish. Statistical results are weighted to correct known demographic discrepancies. The margin of sampling error for the complete set of weighted data is plus or minus 3.6 percentage points.