This might surprise you: Turns out more and more millennials don’t have a credit card. And while that might sound smart, Consumer Reports says going without a credit card is a big mistake.
Your credit score figures into all kinds of financial transactions -- getting a mortgage, auto insurance, a car loan. And you can’t have the best credit score unless you use a credit card responsibly.
19 year-old Nolen Riedel is working his way through college and is very careful with his money. He says he doesn’t want to risk getting a credit card.
“I’ve seen some friends rack up a lot of debts that they can’t pay off and I don’t want that to be me,” said Riedel.
That might sound like a smart move, but not having a credit card can hurt you in other ways. Consumer Reports’ money expert, Tobie Stanger, says responsibly using a credit card and building a high credit score is critical.
“Your credit score figures into all kinds of financial transactions --getting a mortgage, auto insurance, a car loan. And you can’t have the best credit score unless you responsibly use a credit card," said Stanger.
You should aim to have a credit score of about 650 or higher and credit card use accounts for about 30% of that score.
To get the best credit score, you have to pay all your credit card bills on time and in full. To avoid credit card pitfalls, set up payment alerts on your smartphone. And don’t keep your credit card information on file with retailers. That can make it too easy to click and buy.
Right now, Nolen uses cash or his debit card for everyday purchases.
“I’m definitely going to need to start to build my credit and maybe get a credit card soon," said Riedel.
And when he does, he says he’ll use it responsibly to build good credit.
Consumer Reports says there’s another benefit to credit cards – they have important fraud protections that debit cards and other forms of payment may not.