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Millennials avoid credit cards and their accompanying debt
Whether it's from memories of the recession from 2008 or just avoiding temptation to spend beyond your means, millennials aren't using credit cards that much. - photo by Sarah Anderson
Millennials are not as interested in using a credit card as older generations, and its a trend that could have a lasting impact on themselves and the economy.

Federal Reserve data indicates the percentage of Americans under 35 with credit card debt has reached it lowest point since 1989, according to The New York Times. While other age groups have been shedding credit card debt since 2008, millennials have had the most rapid decline in the proportion who hold credit card debt.

Its pretty clear that young people are not interested in becoming indebted in the way that their parents are or were, David Robertson, publisher of a newsletter that tracks the payment industry, told The Times.

But this debt-averse behavior may have unfortunate and lasting consequences for millennials, according to the article.

Credit card use has historically helped young Americans develop a comfort level with credit that can lead to a succession of big purchases financed by debt, The Times explained. It will make the access to credit for items, such as a home mortgage or even something smaller like a computer, much harder to get as their behavior and habits have developed around debit cards, payment apps like Venmo and an overall lack of credit.

Good credit takes time to build, and the length of your credit history makes up 15 percent of your credit score, noted. Lower scores mean higher interests on a house or car.

I think millennials having less credit card debt is simply a result of that group having fewer credit cards, CreditCardForum.coms Ben Woolsey told A NerdWallet study seems to confirm this, with 31 percent of Americans between 18 and 34 found to have never applied for a credit card.

Multiple explanations have been offered for this credit-averse behavior.

One is that millennials grew up under and had their worldviews shaped by the Great Recession, becoming more cautious about debt as a result, noted. The CARD Act of 2009 has also made it harder for college students to qualify for a card, with borrowers needing to be either 21 or older or holding down a steady income.

Then theres the problem of rising annual percentage rates, Newsweek noted. This summer, the lowest available APRs on new credit cards topped 15 percent on average, a five-year high. And rates are likely to increase heading into 2017, as the Federal Reserve shows signs of increasing interest rates and credit card companies are expected to follow.

Erin Lowry, who founded the financial literacy blog, Broke Millennial, told Newsweek she avoided the APR issue by paying off her credit card balance every month. But shes skeptical if the finance industry can make full amends with her age group.

A big part of the issue is a distrust of large financial institutions, and I dont know how you PR your way out of that, she said to Newsweek.