Why Millennials Fear Credit Cards, And Why They Shouldn't

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Do you know any young adults that simply don't bother with credit cards? According to recent surveys, it turns out that milliennials and credit cards may not be a particularly good fit. Millennials, the generation born between 1980 and 1997, report some of the lowest credit card use of any age group. In fact, only 61.34 percent of millennials own a credit card, the lowest of any generation, according to a survey by LendingTree.

Why Millennials and Credit Cards Aren't Getting Along

For the most part, millennials grew up during the great recession and the simultaneous housing and credit crunch. Many had the experience of watching their own families or their friend's families struggle with unemployment, debt, and even foreclosures. There's no doubt that these experiences affected that generation's lifelong view of debt, just as those who grew up during the Great Depression often remained frugal throughout their life. In addition, millennials are currently suffering from higher unemployment rates than the rest of the country, which makes it less likely that they will be able to qualify for a credit card.

How Avoiding Credit Cards May Be Hurting Millennials

According to LendingTree's survey, more than half of millennials are paying their balances in full each month (53.49 percent). So while it's great that the younger generation is trying hard to avoid debt, they may be throwing out the baby with the bathwater by avoiding credit cards altogether. First, credit cards offer superior security and convenience compared to other methods of payment. For example, cash is extremely vulnerable to theft, and checks are prone to fraud. And with debit cards, any erroneous or fraudulent transactions will have an immediate effect on the bank account. In contrast, credit cards are protected by more robust laws that allow cardholders to request a charge back whenever they do not receive the goods or services they paid for.

In addition, credit cards offer valuable benefits, including purchase protection and travel insurance. When traveling, it's far easier to reserve a hotel room or rent a car if you have a credit card. But perhaps the most important reason that millennials and credit cads should be getting along is to establish a credit history. By avoiding credit cards, some young adults are failing to create the credit history and credit score that they will need when they apply for a car loan or a home mortgage. Since a strong credit history can take years to build, its important that young adults start well before they need to apply for an important loan.

Responsible Credit Card Use for Young Adults

The best way for anyone to use a credit card is to avoid all interest charges by paying each month's statement balance in full and on time. And even if cardholders only make an occasional charge to their account, they will quickly build a payment history while carrying very little debt. At the very least, young adults who are weary of debt will want to use their credit cards only when they offer the most benefits, such as when traveling or when buying something that is eligible for a purchase protection policy.

By using credit cards responsibly, the millennial generation can leverage the strengths of these products while continuing to avoid debt.

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