Millennials and credit cards don't mix. Survey after survey shows that fewer of these individuals have credit cards than any other age group. Some of this can be explained away by the introduction of legislation after the last financial crisis. The CARD Act of 2009 made it more difficult for those between 18 and 21 to get credit cards. However, some of the low credit card numbers are also due to a negative mindset this group has about the product.
Part of the aversion to credit cards is justifiable. If they are mismanaged and handled poorly, credit cards can lead to financial ruin. Credit card debt among balance carrying households is at an all time high. However, completely ignoring credit cards can also lead to potential problems. The answer is to not hide from credit cards, but instead to learn how to wield them like a tool. If one can achieve this, a credit card can have a net positive impact on your financial standing.
- Credit cards are one of the first ways you'll establish a credit history. While this may not seem like a high priority right now, it's something you might appreciate later in life. When you decide to finally buy a home or apply for an auto loan, you'll be thankful to have a long credit history. Opening up a credit card account is one of the easiest ways to begin this process. There are plenty of credit cards tailored towards individuals with no credit score, and even students. While other types of loans may be difficult to qualify for young millennials, credit cards present an easy access point. Our studies show roughly 38 percent of millennials have a poor credit score -- that is one below 620. In contrast, roughly 16 percent of baby boomers fall into the same credit category. It's not enough to open up a credit card account, but also to use it responsibly. Pay your bills on time, and don't use more than 30 percent of your total available credit limit. As long as you stick to these general rules, your score will grow over time.