Many young people in New Jersey are choosing not to apply for credit cards these days. This may turn out to be one of the unintended effects of the recession. After watching many people struggle with their debt and file for bankruptcy, there is a whole generation of people that may be reluctant to use credit cards.
This presents a new set of problems, however. Our economy is set up such that it takes credit to get credit. Most college students are encouraged to get a credit card in order to start building their credit rating for when they want to buy a car or even a house. There are some that wonder if this reluctance to have and use credit cards will extend to taking out a mortgage.
In order to help people build credit without credit cards, things such as cell phone payments and rental payments are being considered in the application process. Experian and WilliamPaid will be teaming up to allow people to have their rental payments count toward their credit score. This will allow people to build credit without having to use credit cards to do it.
There seems to be a trend toward young people using debit cards more than credit cards. Whether this will keep a generation of Americans from facing the financial struggles of older generations remains to be seen. As for those people who are still struggling with their debt, bankruptcy may be a way to get a fresh start financially. This could be a way for many people in New Jersey to erase the impact of the recession on their financial lives.
Source: Chicago Tribune, “Young people avoiding credit cards,” Jeanna Smialek, March 20, 2013