A report from PricewaterhouseCoopers (PwC) suggest credit cards are in decline with many consumers increasingly looking to alternative credit streams, especially payday loans.
Many young adults find themselves locked out of mainstream borrowing with credit cards scarcely feeling like an option because applications from young people are often turned down due a lack of credit history.
However, David Black, banking specialist at financial product rating group Defaqto, said that young people may be missing out by not getting credit cards. "They have a number of advantages," he said. "Customers can get rewards and introductory offers as well as purchase protection." Short-term loan providers can be cheaper than a bank overdraft or a credit card interest rate, but the danger is that if you continue to "roll over" your debt for many months it will become very expensive.
Using a credit card sensibly and settling the balance each month will help put a positive spin on to your credit report as lenders like to see that you can be trusted wth credit and will be more favourable to those with credit cards.
In addition, paying for goods and services using a credit card provides protection under "Section 75" which means your card company must reimburse you if a company goes out of business or refuses a refund for a faulty or damaged product.
On the whole there is not a great deal of appetite from credit card providers when it comes to young people, however there are a few providers who give young professionals the opportunity to build up their credit history through the use of a credit card.
The best credit cards for young people are the specialist credit builder cards such as The Initial Visa from Barclaycard which is designed for people looking at taking out their first credit card. Vanquis also offer a similar deal although rates are quite steep on with both offering. You will need to be at least 18 years of age, earn more than £10,000 before you can apply for a credit card.