Lack of credit score

Millennial Trends: Credit Card Aversion

My bank keeps asking me to sign up for a credit card but I’m just not interested. And according to a recent Bankrate study, I’m not alone.

63 Percent Of Millennials Don’t Have a Single Credit Card To Their Name.

There are many possible reasons for this. The average student debt in 2014-15 was $31,000. That might not seem so bad. But ten years after finishing school, even some elite college grads only recently started to earn more than the average high-school graduate. Adding to this, many post-grads have gone into delinquency, compounding their interest rate and making it even more difficult to pay off their principal.

Such burdens seem to have severely impacted my generation’s attitude toward not just student debt, but debt of all kinds. We can’t afford much of anything when we already owe the next 15 or more years of our life to XYZ Loan Agency.

Student Debt Probably Isn’t the Only Thing Making Millennials Cautious About Credit Cards. 

I’ve heard horror stories from older adults about how paying the minimum “suggested” amount on a credit card bill will not pay down the actual debt principal, but instead go almost entirely toward accrued interest. In addition, just one missed payment can incur a mountain of fees and a hiked interest rate, trapping the cardholder in a relationship with their creditor that has gone from bad to worse.

The above scenarios are simply due to a lack of education on carrying debt. Anyone who is unaware of the terms and policies of credit card companies can fall victim to them. But it is also true that credit cards, if used responsibly, are great tools for making purchases as a means for building credit. As noted in the Bankrate study, 37 percent of millennials do use credit cards.

As for me, I recently celebrated the wonderful milestone of becoming debt free. I am protective of this achievement, and if college taught me anything, it was the loud-and-clear lesson that “paying later” translates to “paying a lot more later.” For now, I don’t feel comfortable making it a habit to pay later. I don’t want instant gratification; I want instant settlement.

Credit cards are in direct opposition to this lesson, so I don’t use them. Instead, I’ve built up my own emergency fund that I use in the case of flat tires or other unexpected expenses. I never use it unless I have to.

What About Building Credit?

A credit card is a tried and true way to build a credit score—but it’s not the only option. Other alternatives include:

  • Paying your rent (on time, of course!) through a service that applies your rent to your credit score, such as RentTrack. You can invite your landlord to sign up through the site, which makes rent collection easy for them, too.
  • If your landlord doesn’t want to pay for a rent-collection service, they can provide you with a letter of “good credit,” stating your history of timely rent payments for potential creditors.
  • Taking out a loan from a local bank and paying it back month by month, and not touching the principal balance.

These are more difficult and time-consuming tactics than using a credit card, but for me, the inconvenience is worth the peace of mind.

If you know you can hold yourself to a few monthly credit card purchases — those that can be paid off every month — then go ahead and use a credit card for everyday purchases. To stave off temptation, reserve it for use at the grocery store or the gas station, for instance. Stick to your debit card at Best Buy and Banana Republic.

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