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Why millennials don’t like credit cards

By WTOP Staff

Cheap, easy credit might have been tempting to young people in the past, but today’s millennials aren’t biting. According to a recent survey by Bankrate of over 1,161 consumers, 63 percent of adults ages 18 to 29 are living without a credit card of any kind, and another 23 percent only carry one card. But, why?

The Impact of the Great Recession

Research shows that the environment millennials grew up in might be having an impact on how they view the economy and their finances. Unlike other generations, millennials have lived through economic hardships during a time when their adult lives were just beginning. According to the Bureau of Labor Statistics, the Great Recession caused millennials to stray from historic patterns when it comes to purchasing a home and having children, and a fear of credit cards could be just another symptom of the economic environment of the times.

And there’s no shortage of data when it comes to proving that millennials have grown up on shaky economic ground. The Pew Research Center reports that as many as 36 percent of millennials were living at home with their parents in 2012. Meanwhile, the unemployment rate for people ages 16 to 24 was an astounding 14.2 percent (more than twice the national rate) in early 2014, according to the BLS. With figures like those, it’s no wonder that millennials are skittish when it comes to using credit cards as a form of payment. It make sense that young people would be afraid to take on any new forms of debt and opt to steer clear of temptation when they can.

A Generation Plagued with Student Loan Debt

But the Great Recession isn’t the only reason millennials could be fearful of cheap and easy credit. Many experts believe that the nation’s student loan debt level might have something to do with it. According to the Institute for College Access & Success, 71 percent of millennials (or 1.3 million students) who graduated from college in 2012 left school with at least some student loan debt, with the average amount owed being around $29,400. Students who attended for-profit colleges were even worse off; as the institute reports, the average debt load for these students was $39,950 in 2012.

With so much debt already under their belts, millennials are rightfully worried about adding any credit card debt to the pile. After all, many adults with student loan debt need to make payments for years, and even decades, to come. Why make it worse?

How Millennials Can Build Credit Without a Credit Card

The fact that millennials are smart enough to avoid credit card debt is a good thing, but that doesn’t mean the decision is without its drawbacks. According to Experian, most adults need a positive credit history in order to qualify for an auto loan or mortgage. Even worse, having no credit history is almost as bad as having a negative credit history in some cases.

Still, there are plenty of ways millennials can build a credit history without a credit card. A few tips:

— Make payments on installment loans on time. Whether it’s a car loan, student loan or personal loan, make sure to mail in those payment on time and pay at least the minimum amount required.

— Put at least one household or utility bill in your name. Paying your utility or household bills on time can help you build a positive credit history.

— Get a secured credit card. Unlike traditional credit cards, the funds secured credit cards offer are backed by money the user deposits. Signing up for a secured card is one way to build a positive credit history without any risk.

The fact that millennials are leery of credit cards is probably a good thing in the long run. After all, not having a credit card is the perfect way to stay out of credit card debt in the first place. Even though it might be harder to build a credit history without credit cards, the vast majority of millennials have decided that the plastic just isn’t worth it. And, who can blame them?

More from U.S. News

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5 Reasons More Millennials Are Renting

How to Talk to Millennials About Money

Why Millennials Don’t Like Credit Cards originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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