Why millennials should use credit cards
Most of my fears are pretty irrational. And I’m fully aware of that.
Getting “pushed” by the wind and falling on the subway tracks, waking up with no recollection of who I am, being attacked by a swarm of pigeons (okay, New Yorkers might understand that one).
Another fear of mine isn’t so irrational. Sinking into credit card debt. And it turns out, I’m not the only one plagued with this anxiety.
A recent Bankrate survey found many millennials are wary of credit cards. Actually, only 33% of adults between the ages of 18 and 29 have one. Apparently, that little piece of plastic is way more intimidating than one might think.
Why millennials are wary of credit cards
Media outlets ran with this news, running splashy headlines. Older generations raised their eyebrows and scratched their heads, puzzled by millennials’ lack of interest in credit cards, which goes against almost every stereotype we’ve been stuck with. Greedy. Reckless. Self-involved.
But to me, this news was far from shocking and was, in fact, completely understandable.
As a generation, we lived the recession. We watched our parents lose their jobs and financial foundations crumble. We’ve heard countless horror stories of the dangers of credit card debt, and we viewed credit cards almost like a gateway drug — one small taste could end up being the end of our financial freedom.
So, naturally, we gravitated toward cash and debit cards.
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My rocky relationship with credit cards
I’ve come a long way from my teenage self.
I was notorious for spending my hard-earned waitressing tips foolishly on shopping sprees and concert tickets, so the idea of giving me complete control of my own credit card (understandably) struck fear in the hearts of my parents.
My dad, like the savvy financial guru he is, realized the importance of building up my credit score long before I understood the concept.
At first, I was simply an authorized user under his credit card. I was given strict instructions to only use the credit card “in case of emergencies.” With the threat of being grounded looming over my head, I kept the card tucked safely away in the back slot of wallet. There were a few instances justified as emergencies (all involving my car … if you knew what my driving skills are like, you’d understand this), where I would whip out the card. My dad always paid the bill on time, so my credit score gradually started to build without me having to worry about any responsibilities.
I was an authorized user on my dad’s card throughout college, but when I graduated and landed my first job, my dad took me to the bank and basically had to force me to sign on the dotted line for my own card.
“You need to keep building credit, you can’t be linked to my card forever,” he insisted.
Despite priding myself on my independence, this felt like a major step I just wasn’t ready to take.
What if I over-spent, and found myself engulfed in credit card debt that would take me years to get rid of? What If I missed the deadline for paying my bill on time and ruined my credit score in the process?
With my safety net gone, it felt like I was free-falling into financial oblivion. I continued to push back, but like with all fights with my father, I failed and signed up for what the bank dubbed a “starter” credit card. I moved to New York and kept the card in the bottom of my safe. Out of sight, out of mind.
My dad continued to prod me, “Are you using your credit card?”
I would often lie.
But there came a point where I caved, desperate to join my friends for a night out on the town. I had just paid rent, and knew I was getting a paycheck the following week, so I whipped out the credit card. One bar turned into two, and eventually I was swiping my way fearlessly throughout the city.
The possibilities were endless!
The next morning, I realized why I had been so afraid of credit cards, and why so many of my peers were as well. If you have little self-control, the temptation of a $500 to $1,000 line of credit is just too much, especially if you’re young.
I spent way more than I should have that night, and as soon as I got paid, I paid off the credit card in full. Scared yet again of the consequences of overspending, I pushed the credit card out of my mind.
When using a credit card pays off
It took about 3 months of being on my own before I realized the benefits of having a credit card.
When I applied for an apartment, they checked my credit score. When I needed to book a flight home for the holidays, I needed to use my credit card to cover the cost until I got paid later that week. When I was sick and had to make an emergency visit to urgent care, my credit card came in handy.
Slowly, I began using my credit card more and more, and began to reap the benefits.
After a little trial-and-error, my fear of credit card debt caused me to create a system that truly works for me. I linked my card to my ridesharing apps (like Uber and Lyft), so my card is automatically charged whenever I hail a ride. I’m able to build up my credit score without the temptation of overspending on nights at the bar or unnecessary shopping sprees.
Fear isn’t necessarily a bad thing.
My fear of credit card debt caused me to create an effective system and made me hyperaware of paying my credit card bill in full and on time every month. These are healthy financial habits to start when you’re young, so eventually they become second nature.
If your fear stifles you, though, you could be missing out all the awesome things your credit card could unlock. I’m able to earn rewards, like cashback and airline miles, and I’m given peace of mind knowing that if I get sick or need to book an emergency trip home, I have line of credit I can easily access.
Millennials, credit cards aren’t that scary. Tackle your fear, and swipe your way into financial freedom.
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