Many young Americans have a large amount of debt even before they begin working. Millennials—people between 18 and 35—are worried about paying their student loans, so many of them are not using credit cards. Some experts believe this trend may have a long-term effect on the economy.
Stefanie O'Connell graduated from New York University with a degree in drama and a large amount of debt. There were not many jobs for someone with her education. So she became cautious about how she spent her money.
That behavior caused her to begin a new career as a financial expert. She writes a blog about wealth management. It has helped her to learn that many millennials share her situation.
"They're very wary of spending beyond their means. They're wary of tools like credit cards. They're wary of taking any kind of risk—even if it is a smart risk, like investing."
O'Connell's experience with her blog readers is supported by information gathered by the U.S. central bank. It found that the percentage of Americans under 35 who hold credit card debt has fallen to its lowest level since 1989.
Credit cards are an important part of the American financial system. Without one, it is difficult to buy many goods and services. These can include buying a cell phone or renting an apartment.
Credit expert Adam Levin says young people need these financial instruments.
"It's critically important for a young person to build credit, to build strong credit. That doesn't mean you over-credit yourself. It just means that you are wise about your credit; you are a responsible payer, that you don't get yourself in over your head."
Smartphone apps like Level Money can help young people build credit. The apps give advice and help people make better spending decisions without going deeper into debt.
I'm Ashley Thompson.
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Words in This Story
credit cards – n. plastic cards that let people spend money on credit with the understanding that they will pay it back
drama – n. the art of acting in a play or other performance
blog – n. a web log, a website in which people write their opinions, experiences or activities
wary – adj. not having or showing complete trust in someone or something
beyond (one's) means – idiom. to be more expensive than a person can afford
financial instruments – n. financial products people use for investment, any kind of tradeable asset
critically – adv. very, extremely
over (one's) head – idiom. to be beyond someone's ability to understand or act