At this point, it feels like it’s become something of a national pastime to hate on millennials.
We have stupid haircuts. We’re pretentious about beer and coffee. We get persnickety about “management styles” at work and accept handouts and free digs from mom and dad well into our 20s (OK, sometimes 30s).
So when Bankrate’s recent survey found only 33% of millennials have a major credit card, I know some people were surprised. Avoiding revolving debt seems like an uncharacteristic display of responsibility from the generation we love to hate.
I say “I know” because one such shocked person was my father, who greeted me with the following a few days ago:
“I heard about you millennial people on the news this morning. Very impressive!”
Two-Thirds of Millennials Don’t Carry Credit Cards
One thing’s for sure: Going into credit card debt is no fun and not a good financial strategy.
And with a credit limit way higher than the number on your paycheck, it’s easy to fall into the vicious debt cycle.
But before you gleefully accept your elders’ congratulations, shred your cards and help bloat that figure to 34% or even 50%, hold on.
While the decision to forego credit cards entirely might seem like a smart financial strategy, it might not actually be a good idea.
Credit cards can actually be extremely useful — if you know how to use them right.
Personally, I buy everything on my credit card. I just make sure I pay my cards down in full every single month to avoid paying even a cent of interest.
It took me a while to get to this point — initially, I screwed up my credit pretty badly and had to rebuild it. But that’s why it feels even better now to take advantage of the credit companies for all they’re worth.
Here are the ways credit cards can be useful tools:
1. They Establish Your, Well, Credit
It’s pretty hard to get an auto loan or a mortgage if you have no credit history.
Although there are lots of ways to get started, credit cards are probably the easiest way to establish credit history. There’s little barrier to entry for many low-limit cards, and you don’t need a down payment or deposit unless you’re applying for a secured card.
Even if you’re in your free-wheeling 20s right now, in 10 years, strong credit could save you thousands of dollars if you purchase a home.
2. You Can Get Free Rewards
Here’s why I use credit cards exclusively: I love to travel, and I don’t love spending thousands of dollars on airfare alone.
Rewards like frequent flier miles and cash back are used to advertise credit cards — for good reason. They’re super appealing, and they make it feel less naughty to spend on your card. Spend more, get more, right?
Right, unless you overspend until you can no longer pay in full — in which case, the card company makes a lot of moolah on your irresponsibility.
But if you’re not accruing interest, these truly are free rewards — just for making your purchases with plastic instead of paper.
In my case, they pay for the bulk of my travel expenses.
3. Many Come With Additional Perks
Other fun stuff I get from my credit cards:
- A statement credit for any in-flight WiFi I buy
- Free access to my FICO score
- Invitations to exclusive events
Some cardholders even get free TSA Precheck or Global Entry as a perk, and lots of us have surprisingly powerful concierge services we never take advantage of.
Having a credit card can sometimes feel as empowering and glamorous as the advertisements try to make it seem.
If You Don’t Have Strong Willpower, Forget Everything I’ve Said
Although they can be awesome for all the reasons I’ve listed above, if you don’t trust yourself not to abuse them, it probably is smarter to forego credit cards altogether.
The only way to reap the benefits without personal cost to you is to pay your cards off in full every single month.
Otherwise, it can be easy to buy something you know you can’t really afford — “just this once” — and fall into the cycle of revolving debt.
And trust me, that is one merry-go-round you do not want to ride.
Your Turn: Do you or the millennials you know (and, admit it, love) carry credit cards?
Jamie Cattanach is a millennial staff writer at The Penny Hoarder who definitely has credit cards. Her writing has also been featured at Word Riot, DMQ Review, Hinchas de Poesia and elsewhere. Find @JamieCattanach on Twitter to wave hello.