Add credit cards to the list of things the millennial generation is killing. TD Bank’s Annual Consumer Spending Survey found that nearly a quarter of millennials don’t have a credit card. Not one. 

Boomers and Gen Xers love their credit cards. Even 50% of Gen Zers old enough to get credit cards have them, according to the survey. So, why aren’t millennials keen on paying for things with credit?

Why Millennials Aren’t Keen on Credit

Here are six reasons millennials might be avoiding the plastic they have to pay interest on and opting for the plastic they don’t:

1. Debit Cards Suit Their Sensibilities.

Debit cards allow consumers to consolidate their banking, bill paying and purchasing functions into a single smartphone app. Many online debit cards require no balance minimums, come with the same security of a credit card and charge no international transaction fees — perfect for travel-hungry, cash-strapped millennials. 

These days, many debit cards are also catering to millennials’ tech interests. By facilitating contactless payments through Apple Pay and Android Pay, they’re letting millennials make payments directly from their smartphone or smartwatch. Younger millennials, in particular, would much rather carry their phone than their wallet. 

2. The Great Recession Shaped Them.

The Great Recession lasted from the end of 2007 through the middle of 2009. During that time, a lot of millennials were trying to enter the job market for the first time. Unable to find work, they avoided credit cards because they worried about their ability to pay for what they charged. 

Debit cards allow millennials to avoid unsecured debt. And just in case their bank goes bust, debit cards also have the security of being FDIC-insured. 

3. Credit Cards Became Tougher to Get.

There was a time when just about anyone could get a credit card. You could fill out an application and a credit card would appear in the mail. College students with no income maxed their cards out and struggled to make even the minimum payments. 

Due to a wave of credit card defaults that contributed to the Great Recession, legislators passed the 2009 Credit Card Accountability, Disclosure and Responsibility Act. The Act prohibited companies from giving credit cards to consumers without assessing their financial ability to pay,  from arbitrarily raising interest rates after a late payment and from allowing the cardholder to exceed the credit limit.

Together, those rules meant a lot of millennials would have been unable to even get a credit card. Although many of them are eligible now, they’ve already gotten comfortable with other popular payment methods. 

4. Debt Is a Four-Letter Word.

In addition to facing economic hardships due to the Great Recession, millennials have been saddled with the largest amount of student loan debt of any generation. Many who managed to find a job after college couldn’t command a salary high enough to let them live independently while making their monthly student loan payments. 

Millennials have received a bad rap for living with parents long after college graduation, but their economic reality gives many of them little choice. Instead of incurring more debt, millennials choose to cut out the cost of rent to focus on career-building and paying back the debt they already owe.

5. They Are Obsessed With Credit Scores.

A 2019 survey by Experian found that eight out of 10 millennials had checked their credit scores within the last three months. Asked to rate the importance of scores, from credit to social media to their Yelp rating, 59% of millennials rate their credit score the most important. Almost as many, at 49%, believe their credit score impacts their life the most.

A key component of a high credit rating is low credit utilization. Millennials would rather use credit cards only when absolutely necessary to ensure that they qualify for the best rates on home loans and other types of credit. 

6. Credit Has a Racial Divide.

The percentage of people of color without access to a credit card is nearly double the percentage of white people without one. What’s more, median credit scores for people of color are dramatically lower than those of white consumers. 

What does that have to do with millennials? Their generation is the most racially diverse one ever, making up 43% of the nation’s primary working age minorities. By 2025, millennials will comprise 75% of the nation’s workforce. If more minority adults are millennials and they lack the most access to credit cards, well, you get the picture.

What’s the Way Forward?

What does this all mean for debit and credit card companies? The good news for credit card companies is that as people get older, they tend to rely more heavily on credit. That’s true even for millennials: According to an Experian study, millennials increased their average credit card debt by 7% in 2018-2019, and that trend continues.

For millennials to ever use credit cards like their parents do, however, issuers will need to focus on what appeals to their generation. Here are three things they can do:

Feature Bigger, Better Rewards.

Many millennials love to travel. Increasing the rate at which they accumulate points for things like hotels and airfare could encourage new credit card sign-ups. Millennials who prefer to save money may be more enticed by bonus rates on linked savings accounts.

Help Them Deal With Student Debt.

Using a credit card isn’t a good way to repay student loans. But offering a round-up repayment feature, in which the difference between the purchase price and the next dollar is credited against a student loan balance, could be a hit. 

Address Systemic Racism.

Financial inequalities are very real for millennials of color. Credit card companies can boost adoption and act as a safety net for these millennials by reaching out to underserved communities. Building trust by hiring from these communities could go a long way. 

Credit card companies have their work cut out for them. But if they can help millennials learn to use credit responsibly — and make opening an account worth their while — they and their millennial customers will both be better off for it.