Did you know that almost everyone who fits into the category of millennials has now graduated from college and/or been in the workforce for several years? This means that all millennials have entered the working adult stage of life and are facing decisions about buying a home, purchasing a car, and acquiring credit cards.
As a whole, millennials are known for being debt-conscious, making them shy away from credit cards and the possibility of incurring debt. Many millennials have lived with family members with a substantial amount of credit card debt and they do not want to find themselves in the same category. Additionally, some millennials have received warnings regarding the risks of credit cards from older family members, so many have avoided credit cards entirely. One survey suggests that two-thirds of millennials do not have credit cards.
While many millennials have avoided credit cards, there is one type of card to which they have gravitated: cards with travel rewards. Millennials love to travel and blog about it. They enjoy anything that will increase the number of opportunities they have to travel. Additionally, more broadly, millennials like rewards programs in general and seem to be more open to cash back rewards credit cards. Credit card companies have capitalized on this desire for rewards by developing unique perks for millennials on their credit cards like free Netflix, Starbucks rewards, and once-in-a-lifetime experiences.
Since millennials are younger, credit card mistakes can have a greater impact on their future financial decisions. Several missed payments or misusing a credit card can lead to a poor credit score and challenges buying a house later on. Additionally, millennials seem to have a lack of understanding regarding credit cards and how interest rates, missed payments, and so forth work. They may also not know what their current credit card limit is or may max out their limit. Millennials should learn more about credit cards and proper usage to set themselves up for success. Although proper credit card usage is important for individuals of any age, it is essential for millennials who are in the beginning stages of developing their credit history and their financial habits.
In closing, millennials have a confusing relationship with credit cards. Some avoid credit cards entirely since they have been taught that credit cards can dangerous. For those who do choose to get credit cards, they prefer ones with rewards, particularly travel benefits. As millennials get older and more experienced in and informed about credit cards, it seems likely that credit cards may become a more popular choice for millennials.