Smart Borrower Blog

Credit Card Use is on the Rise, But Not among Millennials

Aug 17th, 2016 @ 8:37 PM by Amber Nelson

Americans are charging more purchases to their credit cards, according to new data from the Federal Reserve, but that trend does not include the nation’s youngest generation of spenders – Millennials.

The Federal Reserve Bank of New York reported Tuesday that household debt rose $35 billion, or 0.3 percent, in the second quarter of 2016, up to a total of $12.29 trillion, with most of the growth coming from credit card and car loans. The Fed also reported that most of the increase in debt is attributed to sub-prime borrowers.

Millennials, however, are staying as far away from credit as possible. Having been saddled with the largest percentages of student debt in history and having watched loved ones suffer big losses during the Great Recession, many of them are taking an opposite path of their parents.

The Fed survey found that the share of Americans under 35 who own credit cards has dropped to its lowest level since 1989. Just 37 percent of households headed by someone 35 or younger had credit card debt as of 2013, the latest year information is available. That’s a decline of almost a quarter from five years earlier.

“It will probably take them longer to get access to credit,” said Gregory Elliehausen, an economist at the Federal Reserve. “In the meantime, their behavior and some of their habits will have already been formed.”

Mortgages and auto loans depend on credit scores, and without a sufficient length of credit history, many of these Millennials will not have high enough score to qualify. But perhaps, that fact is not worrying to them. Other recent studies have shown that Millennials are not buying homes or getting car loans in the same numbers as previous generations at their age. This may simply be a cohort of American consumers that is not willing to take on the risks of debt as easily as their predecessors.

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to and

Leave a Reply