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Is it wise for millennials to avoid credit cards?

Millennials (adults 35 and younger) are less likely to have credit cards. If they do, they have lower amounts of credit card debt than people in their parents' generation. In fact, according to a survey by Bankrate, while 35 percent of people in their 30s and older don't have a credit card, nearly two-thirds of people between 18 to 29 don't have one.

The generational link to credit cards and debt hasn't always been this strong. The percentage of overall credit card debt held by those under 35 dropped from 25 percent at the beginning of this century to 10 percent in 2013.

There are several key factors behind millennials' aversion to credit cards. Many saw their parents lose their jobs during the recession and/or struggle with massive amounts of credit card debt. Further, under the CARD Act of 2009, it's more difficult for college students to get credit cards.

A "pay-as-you-go" philosophy of spending makes people more cognizant of just how much they're actually spending. It can certainly save money in interest charges and late fees. It can also protect you from getting buried in credit card debt.

However, some financial experts caution that there may be a price to pay (literally) for not having a credit card. A credit history is integral to your credit score. The longer your credit history (assuming that it's good), the better your score. When you're ready to buy a car or a house, that score will impact the interest rate you receive. On a six-figure mortgage, that can add up to a lot of money. Even your ability to rent an apartment can be impacted by a limited credit history.

If you're nervous about having the temptation of a credit card, but need to build up your credit history, you can start with a relatively small line of credit on your card. If the company gives you a larger line than you can handle, ask them to reduce it. Further, be sure that you pay off your balance in full every month -- not the minimum required payment. A budgeting app like Mint can also help you track all of your spending, whether it's via cash, debit card or credit card. There are plenty of online sources that provide advice for people just starting out on their own to manage their money -- and their credit -- wisely.

Source: TIME, "Here’s Why Millennials Should Stop Hating on Credit Cards," Taylor Tepper, accessed Sep. 16, 2016

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