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Young adults who are afraid of credit cards in the long shadow of the recession usually think only of the risks, rather than the role they play in establishing credit, consumer credit experts say. That can hold them back from building the credit history they’ll need later on if they want to finance a car or get a mortgage.

Data from the Consumer Financial Protection Bureau show that about half of people ages 18 to 34 had at least one credit card in 2015, compared with 60 to 80 percent for those 35 and older. Last year, an analysis of Federal Reserve data by The New York Times found that just over a third of these young adults, or millennials, had credit card balances, an indicator of whether people are using their cards.

Credit card issuers in the past marketed extensively to young people, particularly college students, which helped them establish a credit history. That ended with a federal law in 2009 that made it harder for people under 21 to obtain a credit card. Lingering memories of the economic downturn left younger adults wary of credit cards even when they became eligible.

“One of the reasons why millennials are afraid of credit cards is because many of them watched their parents get in trouble during the Great Recession,” says Beverly Harzog, author of several books on credit cards, consumer credit and managing debt, including “The Debt Escape Plan.”

“Fear partly comes from the unknown, from not having used a credit card,” says Mikel Van Cleve, personal finance advice director for financial services firm USAA.

Here are five common questions and answers that can help credit newcomers understand credit cards and conquer their fears.


Using a credit card is the fastest and simplest way to build a credit history. And you don’t have to go into debt to do it. Use the card to buy only what you can afford — what you would otherwise pay for with cash — and then pay off the balance in full every month.

“Don’t think about debt. Think of a credit card as a tool to build credit,” Harzog says. “You want to build a credit history because it will help you throughout your life.”

Your credit score is a gauge of how much you can be trusted to borrow money: Do you spend within your means? Repay the money on time? Using a credit card responsibly demonstrates your ability to meet your financial obligations and builds your score. A good credit score can make the difference between loan approval and rejection, and it will get you better interest rates.


Just as using credit cards responsibly can build your credit, using them irresponsibly can damage it. Piling up debt, maxing out the card, paying late or missing payments hurts your score. Fear of these things is what drives fear of credit cards, but these things don’t have to happen: Carrying a credit card doesn’t mean going into debt or buying things you can’t afford.


Newcomers to credit have a couple of options. One is a secured credit card . With these, you make a refundable security deposit — say, $200 or $500 — and this becomes your credit line.

“Each month, you make a payment that gets reported to the credit bureaus,” Van Cleve says. In time, with responsible use, you’ll be able to move up to a regular, unsecured card that offers rewards or other benefits.

Another way to get started is to become an authorized user on someone else’s credit card, such as a parent’s. But not all issuers report authorized-user activity. “As long as the history is being reported, you’ll get credit for it,” Harzog says.


Credit card interest rates are called APRs, or annual percentage rates. The bad news: Your first card is likely to have a high APR. The good news: “If you’re paying your balance in full, you won’t have to worry about your APR,” Harzog says.


Most credit card fees are avoidable, including late fees and cash-advance fees. Many cards don’t charge an annual fee, so look for one of those if you’re anti-fee. Rewards cards often charge an annual fee, which can be worth paying if you get sufficient benefits back.

Avoid cards that charge monthly maintenance fees or that require an application or processing fee before your account is even open.


This article was provided to The Associated Press by the personal finance website NerdWallet . Email staff writer Ellen Cannon: . Twitter: @ellencannon.


NerdWallet: What is a secured credit card?

Consumer Financial Protection Bureau: The Consumer Credit Card Market

The New York Times: How Millennials Became Spooked by Credit Cards