From digital trends to workplace shifts, millennials have certainly made their mark on the 21st century. But when it comes to spending, a unique observation about this group can be made. Millennials aren’t using credit cards — and if you’re one of them, it might be harming your financial future more than you think.
A Bankrate/ Princeton survey captured that 63% of millennials (age 18-29) don’t have a credit card. Comparatively, only 35% of adults age 30 and over don’t have credit cards.
So why does Generation Y fear plastic? Experts speculate that millenials aren’t necessarily credit averse, but debt averse. After all, this age group grew up during the volatile aftermath of the 2008 stock market crash. Many felt the secondhand effects of parents losing jobs — or even lost jobs themselves. A fear of overspending and accruing more debt on top of student loans is just one factor possibly contributing to this generation’s avoidance of credit cards.
Building Credit for the Future
While sticking to a budget is a smart move for any age group, building a strong credit score is important for your financial future, too. In fact, carrying a small balance and paying it back over time is one of the quickest methods to build up your credit score.
A good credit score helps you:
- Qualify for consumer insurance policies
- Secure a cellphone contract
- Secure better rates on home and auto loans
- Rent your first apartment
- Pass certain employer background checks
Secondary benefits of a credit card:
- Reward programs
- Fraud protection programs
- A means of emergency income
Credit Card Best Practices
When used responsibly, a credit card can be an essential building block to your financial future. Stick to these basic rules-of-thumb to keep your spending on track.
- Stick to a monthly payment plan – Never skip a payment. This can negatively impact your credit score.
- Pay off your balance each month – By paying the full balance, you avoid accruing monthly interest. This method works well when maximizing cards that offer cash back incentives. If you are trying to build your credit score, carry a small balance and pay it off over a few months.
- Use the card for essentials only – Sure, it’s tempting to take a vacation or dine out more. But frivolous purchases can lead to serious debt. Use the card only for emergencies, such as unexpected car repairs.
- Avoid opening too many new accounts – Chasing teaser rates may sound like a good idea. However, having too many new accounts can lower your average account age, which can have a negative affect on your credit score.
- Longevity is key – It’s best to keep cards open and active to build a positive payment history.
- Pay attention to balance – If you carry a balance, do not exceed more than 30% of your credit limit. If your credit utilization is great than that, it could affect your score.
Credit That Works For U
No matter what stage of life you are in financially, Union has personal credit card options to fit your needs. Each card option provides simple and secure use. You can even earn cash, points, or travel rewards for your everyday purchases. Enjoy EMV smart chip technology for enhanced security and mobile purchasing capability for added convenience.