Posted on: Mar. 26, 2017 in Credit, Money, Debt

Everyone has heard how credit cards can lead to massive consumer spending and debt. Young people are bombarded with credit card offers when they get to college – a time when they have little financial experience on their own, plenty of needs and wants, and relatively little way to earn money to support purchases. This can lead to many graduating with not just student loans, but credit card debt as well. The millennials have taken a cue from past generations and are forgoing the credit cards – but is this the best move?


A survey conducted by Princeton Survey Research Associates International in 2016 found that while the majority of those surveyed who were over the age of 30 had a credit card, only 33% of respondents between 18 and 29 said they carried a credit card. This trend certainly protects younger American from falling into the debt trap their parents fell into.

Obviously, living within one’s means, paying cash for everything, and saving up for larger purchases makes it easier to avoid amassing credit card and consumer debt. This smart money move helps to reduce the financial strain of debt cycles and may even reduce living from paycheck to paycheck. However, by not having a credit card, these individuals are missing an opportunity to build a credit history that will not only come in handy later, but will be necessary to secure larger loans like a mortgage.

Because credit scores are based on a credit history, credit cards are a useful tool. A credit score looks at a variety of aspects of credit history including payment history and types of loans. If you’ve never had a credit card, you’ll be missing vital payment history information. While installment loans (auto loans, mortgages, and student loans) do help to build up that history, having a variety of loans is also essential. This involves revolving debt like credit cards.

What’s the answer? Having a credit card you use regularly and then pay off in full every month is an essential part of building a healthy credit score. Yes, you need to be extremely careful to not go overboard and spend more than you can afford, but used wisely, a credit card can help your financial future.

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