There is a reason credit card companies are no longer allowed to market their products within 1,000 feet of a college campus.
Before the CARD Act was passed in 2009 setting limits on credit marketing to students, card issuers regularly marked the start of a new academic term by setting up stands on campus and offering students T-shirts and other incentives to sign up for cards. Students proceeded to acquire high-fee, high-interest-rate credit cards, often with little understanding of how they worked.
These days, it is much harder for students to obtain credit cards. Students under 21 must have an adult co-signer to get a card or demonstrate that they have sufficient income, and the constraints on campus marketing have also had results. A study by Sallie Mae found that just 30 percent of students reported having cards in 2013, down from 42 percent in 2010.
Even among all millennials (defined here as those ages 18 to 29), credit card usage is relatively rare. A recent survey by Bankrate found that 63 percent of millennials have no credit cards, compared with 35 percent of consumers age 30 and over.
For a generation that watched its elders overextend themselves with credit and did not see the card-marketing offers that used to pervade campuses, credit cards may well seem like a less appealing payment option. And the string of security breaches at major retailers do not exactly make credit cards look secure.
But having a credit card can be useful, even for college students and 20-somethings. Most significantly, having a card and using it prudently can help establish a credit history, which in turn opens the door to lower-cost mortgages, car loans and more.