Why are credit cards being avoided?

The majority of young people avoid credit cards, and there are some good reasons why.

A survey commissioned by Bankrate and compiled by Princeton Survey Research Associates International found that 63 percent of millennials don't have credit cards. The survey found that 23 percent own one card, while a mere 8 percent have more than one credit card. For comparison, 35 percent of adults over 30 don't have a credit card. 

So why are young people avoiding credit cards so steadfastly? Basically, they're trying to avoid debt, and beginning to see that they don't need them to get ahead in life. Credit cards have a number of downsides financially, according to Fox. 

For example, many cards come with cash advance fees. Simply use your credit card with an ATM, and you will likely be slapped with a fee of about $10 or 5 percent, whichever turns out larger, the news outlet explained. Cash advance fees also don't have a grace period, and thus accrue interest from day one. Other transactions, such as using a credit card to reload a debit card, may also count as cash advances and subsequently bring cash advance fees. 

Often-cited as a reason for avoiding credit cards is the debt accrual inherent in using one, Fox explained. Credit cards make it very easy to spend money, and it is easy to lose track of purchases made. This is when credit card users get hit with debt. When interest and fees come into play, it can be difficult to dig one's self out of debt. 

Credit card users also have to put up with unauthorized charges, penalty interest and late fees. Young adults simply don't find credit cards worth it when faced with so many downsides. 

"I don't really feel like there's a need for one in the way I live my life," 24-year-old Melissa Pileiro told Bankrate. "The idea with a credit card is you're essentially putting money down that you don't have."

Building credit without a card
But what about credit scores? Paying off credit cards is a key method to achieving a solid credit score, so what happens to millennials who have a thin credit file because they've avoided cards thus far? 

Alternative credit scores might provide an answer to millennials who would like a better credit score, but don't want to risk the potential for debt that comes with owning a credit card. Alternative credit scores, such as PRBC, utilize different sorts of data than traditional scoring models such as FICO in order to create a better portrayal of consumers' creditworthiness. Information typically utilized includes utilities payments, cell phone bills, subscriptions and cable and internet plans. 

PRBC also helps borrowers find businesses that accept alternative credit scores in order to help guarantee loan access faster. 

For those who grew up during the financial crisis, avoiding debt, maintaining jobs and paying off bills are priorities, David Pommerehn, senior counsel with the Consumer Bankers Association, told Bankrate. Young adults who abide by that ideal should look into alternative credit scores in order to improve access to loans, even without a credit card.