More Young People Ditching Credit Cards Younger adults seem to be developing an aversion to credit cards and the debt that comes with them. A new analysis of data about millions of consumers from FICO, creator of the widely used FICO credit score, finds that in 2012, 16 percent of those aged 18 to 29 had no credit cards at all. That's up from 9 percent in 2005, before the recession. The proportion of consumers in other age groups without any cards is growing too, but not as drastically, said Frederic Huynh, a senior principal scientist at FICO who oversaw the research. For instance, the proportion of consumers aged 60 and older who have no cards is now 2 percent, up from 1.5 percent in 2005. Meanwhile, the younger age group has reduced its average outstanding credit card debt to $2,087 as of October 2012, down from $3,073 five years ago. (The one type of debt that is growing among younger adults is student loans, Mr. Huynh said. That grew drastically, from an average of $6,500 in 2007, to $11,500 in 2012.) What's behind the shift away from using credit cards? Part of the decline is because of the Credit Card Accountability Responsibility and Disclosure Act, known as the CARD Act, which became law in 2009 and made it more difficult for borrowers under 21 to get a credit card. But Mr. Huynh said larger changes are also occurring in the way younger consumers approach credit, in part because of the impact of the recession. Just as the Great Depression influenced a generation in their financial habits, he said, "it stands to reason that the Great Recession has influenced, to a certain degree, consumer credit behavior as well." For instance, he noted, in some metropolitan markets, there have been reports of young consumers forgoing driving altogether, and their use of debt to buy automobiles is lower, too. One implication of a shift away from credit cards is that young people aren't as likely to build a credit report and a credit score as quickly, since credit cards have traditionally been the main way younger people establish credit. That may make it more difficult for them to get credit when they do need it, he said. There are other ways to build credit other than credit cards - student loans are factored into FICO credit scores, for instance - but cards are "very influential and critical" in assessment of credit risk, he said. If young people are using credit cards less, what are they using? The FICO analysis didn't look at that question, Mr. Huynh said. But other reports have noted that younger people seem to prefer debit cards, including prepaid cards, and are likely to be avid users of mobile payment systems as they grow. A report from Mercator Advisory Group, for instance, found that 36 percent of young adults (aged 18 to 35) use debit cards, compared with just 12 percent of seniors. Have your views about using credit cards changed since the recession?