The Great Recession has apparently affected the millennial generation in a way that has made them wary of taking of on debt. This is particularly true when it comes to credit card debt. According to a recent survey of young adults, only one third of respondents indicated that they had a credit card reports Fox Business.
This may be in part to young people observing how the struggling economy affected older family members and friends. In addition, in the past credits cards were seen as a symbol of success. However, that is no longer case as 80 percent of adults reported that they would not be impressed by someone else’s credit card status. Therefore, millennials appear to be taking a much more cautious and thoughtful approach to their financial futures.
While avoiding debt and the high interest rates that often come along with it is a good thing, millennials may be doing themselves a disservice by avoiding credit entirely. When used responsibly, credit cards can be a useful financial tool according to the Huffington Post. In the past, information about credit accounts, including interest rates and fees, were not easily obtained. This, coupled with a widespread distrust of big banks, may lead to some millennials being worried about being taken advantage of. However, information about credit cards is readily available nowadays and legislation has been passed that makes such information available online.
In addition, credit cards are extremely important when it comes to building a credit history. Anytime a person applies for a loan such as an auto loan or a home mortgage, lenders will rely on his or her credit history to determine eligibility for borrowing. Finally, many credit cards offer attractive rewards programs such as cash back or travel discounts that savvy spenders can benefit from.