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Younger Americans using credit cards more than generations past

A new study that many of our younger Michigan readers will find interesting sheds light on the credit card habits of young adults compared to older generations. According to the study, adults in their late 20s and early 30s will rack up thousands more in credit card debt than previous generations and take longer to pay it off.

The news could mean that more young adults will be seeking bankruptcy protection than in prior generations. According to the study, people born between 1980 and 1984 have about $5,700 more in credit card debt than people born 30 years earlier and approximately $8,200 more than those born 60 years earlier.

The academic study, which will is published in the journal Economic Inquiry, examined Capitol One credit card records for more than 32,000 people from the years 1997 to 2009.

One of the most obvious reasons for the explosion in credit card debt for younger adults is the lingering effects of the recession. Young adults face one of the worst job markets in generations, and wages are not growing as they have in years past. People are also taking on more in student loan debt, which could mean having trouble paying for other expenses.

But one psychology professor pointed to another alarming trend: the growth of the Internet. The professor said that online shopping has made it much easier for savvy, young adults to make impulse purchases and charge them to a credit card.

One of the things that many young adults need to worry about is how to properly budget. Setting reasonable spending limits and living within those limits is key to maintaining financial stability. While bankruptcy can happen because of factors outside of your control, putting money aside for emergencies can be helpful.

Source: The Huffington Post, "Credit Card Debt: Study Predicts Millions Will Die In The Red," Laura Rowley, Jan. 22, 2013

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