Millennials Don't Use Credit... But Should They?

A recent survey by Bankrate showed that many millennials don’t carry credit cards on a day-to-day basis. In fact, just 33% of those surveyed in the 18 to 29 crowd even owned a credit card at the time of the survey. People in the 30 to 49 category carried significantly more plastic, with about 55% having at least one card.

Other surveys have shown different results for millennials and credit cards. One from FICO showed that 83% of millennials use credit cards, while an Experian survey showed that two in three millennials own at least one credit card.

Some of these discrepancies can probably be chalked up to different definitions of “millennial.” The Bankrate survey considered those 30 and under in this category, while the other two surveys looked at adults up to age 34. So, it may be that younger millennials are more credit card shy, while older millennials have decided to embrace credit cards.

But which approach is the right one? What are the pros and cons to avoiding credit card use? Here are some to consider:

Avoiding credit can be good when…

…you want to avoid paying interest.

Carrying a balance on an interest-bearing credit card is usually a bad idea. There are times when a card can save you from financial disaster, but it’s best to avoid carrying a balance when you can. With their sky-high interest rates, credit cards can easily double the lifetime cost of whatever you charge.

If you want to avoid paying twice as much for that steak dinner, you’re better off not putting it on a credit card. Of course, you can always pay off your card monthly to avoid paying interest (especially if you want to earn cash back rewards). But unless you’re in a financial position to pay off the balance in full each month, avoiding interest is a good idea.

…you don’t trust yourself.

Credit card spending can be a bit addictive. You can buy what you want, and you don’t feel the financial consequences until later. Some people aren’t big spenders, and have great self control when it comes to using credit. Others, on the other hand, will run up a credit card balance as soon as the account is opened.

If you know you’re the latter type, steering clear of credit cards is probably a good idea. First, work on building up your financial self control. Then, consider adding a low-limit card to your portfolio in order to take advantage of some of the benefits listed below.

…you’re already paying off debt.

If you’re already trying to get out of debt, steering clear of adding more on a credit card can be a good idea. Once you get to the “maintenance phase” of your budget, using a card periodically can net you some benefits. But until then, avoiding further credit card debt is likely a good option.

Resource: Who Needs a Budget?

Avoiding credit can be bad when…

…you need secure payment options.

Paying by credit card is simply more secure than paying by debit card. Although some banks offer debit card protections, fraud protection from credit card companies is typically stronger. Plus, many credit cards come with built-in insurance on the things you buy.

Shopping with a credit card, especially when you’re in higher-risk situations like shopping online, can be well worth your while. And, of course, you can get this benefit without paying interest if you just pay off your credit card balance in full each month.

…you want to build your credit score.

It’s possible to build your credit score without ever taking out a credit card, but it may take longer. Credit scoring algorithms prefer to see a mix of different types of debt in your profile. If you can show that you’re responsible with a credit card by keeping your balance low compared with your limit, your score will creep up over time.

When you’re just starting out, a low-limit or secured credit card can be a great option for building credit. In fact, you may be unable to obtain other types of credit, like a car loan, without first showing you’re responsible with a credit card.

…you want to reap the rewards of responsible use.

Finally, credit cards in and of themselves can offer some serious rewards. Whether you’re going for cash back, travel benefits, or other rewards, you can get rewards just for spending on things you were already planning to buy.

The best way to make the most of those rewards is to game the system. Use the card with the best rewards for your lifestyle, but pay it off every month. That way, you don’t pay the credit card company lots of interest, but they do pay you lots of rewards.

Learn More: How Credit Card Issuers Pay Rewards Without Going Broke

So, is it better to avoid credit cards altogether? For a few people, maybe. But if you can use your credit card responsibly and pay it off in full each month, you’ll reap some great benefits.