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Young consumers rebound from recession-era lull in card ownership

Card Act, weak economy lessened under-40 adults’ appetite for cards for years


Six years after sinking to its lowest point, the percentage of consumers under 40 who have at least one active card is rising to almost pre-recession levels, according to a new report from the Federal Reserve.

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America’s belt tightening during the Great Recession, coupled with post-crisis regulations on issuing credit cards to young consumers, led to a sharp decline in the share of Americans in their 20s and 30s with an open card account, according to the Federal Reserve Bank of New York.

But six years after sinking to its lowest point, the percentage of consumers under 40 who have at least one active card is rising to almost pre-recession levels. In 2007, the year before the financial crisis hit, 56 percent of those age 20-29 held at least one open card. But the Great Recession and its aftermath led to a five-year decline, dropping card ownership rates among 20-somethings to 41 percent.

Part of this downward trend was caused by the Card Act of 2009, which limited issuance of cards to the youngest borrowers.

See related:  Americans’ credit scores are on the rise, Experian study shows

Cardholders in their 30s were also affected, with 70 percent owning a card in 2007 and dropping to only 59 percent by 2012. But in the years since 2012, the rebound in these two groups has been steady. Card ownership among those age 20-29 has reached 52 percent, just 4 percentage points shy of its 2007 level. And the share of those in their 30s with a card is now back to 69 percent, just a hair below their 70 percent peak in 2007.

The reversal is less dramatic for older Americans, since the Card Act of 2009 didn’t directly impact the number of older cardholders. The resulting rebound has also been less robust. Among consumers age 50-59, the share with a card is currently 73 percent, a full 8 percentage points below the 81 percent reading in 2012. Those over 60 also have more ground to gain back, sitting at 77 percent card ownership versus 83 percent in 2012.

The New York Fed’s findings come from its first 2019 installment of the Quarterly Report on Household Debt and Credit, which was released May 14.

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