Many millennials are leaving home without it -- a credit card, that is.
A whopping 63% of millennials -- people between the ages of 18 to 29 -- don't own a credit card, according to a recent survey commissioned by Bankrate and compiled by Princeton Survey Research Associates International. Another 23% cop to having one card, while only 6% have two.
The aversion to becoming over-leveraged is especially acute for New York City's young people who face stratospheric prices for housing, higher-than-average health care bills, and numerous temptations (theater! fashion! nightlife! restaurants!), which make it extremely easy to tumble into the red. And debt, they have learned, is a quagmire they prefer to avoid.
"Getting a credit card is the least of my worries," said Rachel Hubner, 20, a college student who lives in Manhattan with her mother. While she's debated the importance of getting a card in order to establish credit, she is too terrified of debt to take the plunge.
"None of the people I went to high school with have credit cards," she added.
Millennials are both the best-educated generation in American history and also one of the poorest. A 2011 Pew Research Center study concluded that households headed by adults younger than 35 had 68% less wealth than households headed by their same-aged counterparts in 1984. Statewide, the average debt of college graduates is $25,537, according to the Project on Student Debt. With few prospects for future windfalls, millennials have learned from the mistakes of the past and are actively questioning their own identities as consumers and global citizens.
Karla Choko, 29, co-owner of the Sol Dance Center in Astoria, said she watched her mother get gulled into spending too freely taught her the perils of advanced cash.
"She likes shopping -- makeup, shoes. A store gave her a credit card and soon she had 20 credit cards without any real money" to pay all the metastasizing balances, recounted Choko, who has a debit card, but no credit card.
"There is a revolution of people saying now, 'I don't need this!'" as Choko exclaimed.
The city's millennials are Darwinistic geniuses of adaptation -- bunking up in multiples, sharing clothes and food and figuring out novel ways to accomplish their goals while living within their means.
Choko, for example, when asked how she established her business without having a credit card, explained, "I have an older business partner. He established all the accounts."
Writer Kerri Anne Renzulli, a millenial, said on Money.com this month that the generation has a low level of "social trust."
"Having come of age during the recession, we don't have much faith in traditional institutions like banks, and we certainly don't want to be reliant upon them any more than we must," she wrote.
Rodrigo Oliviera, 28, a teacher who lives in the Bronx, had a credit card in Brazil, bestowed by his employer, but after incurring debts there, opted to be credit-card free in NYC.
"It's better not to owe money to anyone," Oliviera said.
The Bankrate survey also discovered that millennials who do have cards aren't so great at paying their bills: Only 40% managed to pay off their balances in full each month, as opposed to 53% of adults age 30 and older.
The findings distress financial planners, who say that obtaining and using credit cards responsibly is an important path to establishing a good credit history. "It's naive," to think you don't need a credit card, said Erika Safran, certified financial plannerwho founded Safran Wealth Advisors in midtown. While she empathizes with young people who are "disillusioned" by ever affording a home in New York City, purposely eschewing credit cards "is a defeatist attitude. People who think that way will not become successful," she said.
"It's a good life skill to be able to manage credit," added Sam McPherson, a certified financial planner and founder and president of McPherson Financial Advisors, in Prospect Heights.
McPherson recommended that young people obtain at least one "secured" credit card, which works similarly to a debit card, to develop a good credit history. "At some point, they're going to need to buy a car," home or other major purchase "and you get a better [interest] rate if you have a higher credit score," he said.
Yet, McPherson said he had empathy for young people mired in mountains of "staggering" student debt who are averse to amassing more. "It's almost like they're indentured servants," McPherson marveled.
A credit card is "one of the more common ways to establishing credit, but not the only option," said Tim Klein, a spokesman for Equifax, one of the big three credit reporting agencies. People can establish credit by being co-signers on car or personal loans and by making on-time payments for cellphone, utility and cable bills, he said. (Rent histories are also sometimes, but not always, reported.) Those that opt to live on fronted money should know that their credit score is only helped if they pay bills on time, keep balances to a minimum (ideally 30% or less of their limits) and don't open multiple accounts in a compressed period of time, Klein said.