One of my favourite topics to write about is credit cards. I love credit card rewards which is why I charge most of my purchases (except at small merchants). I don’t think many people enjoy credit cards as much as I do but I do find it surprising when I read that millennials are using credit cards less.

Bankrate (a U.S. site) just released their Money Pulse Survey and found that just 33% of adults between the ages of 18 and 29 have a credit card. This is absolutely astounding if you think about it. Credit cards are such a vital part of our lives yet it appears millennials are no longer interested in using them.

This completely contradicts RateHub’s 2015 Digital Money Trends Report which found just 1.9% of Canadians aged 18-29 don’t have a credit card. A quarter (26.85 per cent) say they have more than 3 cards so why the big difference?

millennial credit cards

Circumstances have changed

I think it’s fair to say that recession of 2008 left quite an impression on Americans. It’s fair to say that American millennials witnessed first-hand what having too much debt can do to you. Even if they weren’t personally affected, the odds are they knew someone who suffered some serious losses.

When you see people around you losing their homes because of debt, it’s no surprise that millennials in the U.S. no longer have much interest in owning a credit card.

The opposite could be said about Canada. Although there was a dip in real estate prices, government intervention has arguably created a perfect storm. Borrowing money has never been cheaper so Canadians have been piling on debt.

The thing is, credit card interest rates aren’t tied to the overnight rates that the Bank of Canada sets. When you have credit card debt, you’re paying close to 20% to service it.

Why you still need to use credit

By now, everyone should know that you’ll need at least one credit card to build your credit history. Without a solid credit history, it’ll be extremely difficult to get a loan in the future e.g. getting a mortgage.

In RateHub’s survey, 64% of millennials said they used credit cards the most while 40% said they charge 75% or more of their monthly purchases to their cards. There’s nothing wrong with using your credit cards a lot as long as you’re paying your bills in full and on time every month

You don’t even need to use your credit card that much to build up your credit score. There’s no requirement to use your cards on a regular basis, credit bureaus just want to see that you’ve actually used your cards responsibly.

Final word

Although millennials do have more payment options these days, having a credit card is still vital. That being said, if you know you have a shopping problem, you need to be very careful about how you manage your credit. Building a good credit score is important but you don’t do that by making just the minimum payments on your cards.