Why Millennials Should Embrace Credit Cards

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Millennials are avoiding credit cards more than any other generation. Perhaps this is because they have witnessed their own parents struggling with debt, or they are already feeling overwhelmed by student loan repayments. While debt is a good thing to avoid, especially if you don't want to live paycheck to paycheck for the rest of your life, credit cards aren’t always the enemy. (See also: 13 Awesome Credit Card Perks You Didn’t Know About)

In fact, credit cards can actually be beneficial toward your financial goals. Here are just a few reasons why you should embrace credit cards, after all.

See also: 4 Surprising Reasons to Always Use Your Credit Card

Better Protection

If your credit card account information is stolen, and someone goes on a spending spree, you have some time to resolve it. Card charges you flag as fraudulent will be placed on hold while investigated, and you won’t be responsible for their payment or even interest accrual. While fraudulent charges are a royal pain, the silver lining is that none of your actual money has been stolen from your bank account.

This is not true if your debit card, PayPal, or Venmo account has been hacked, and funds are used without your permission. You would report the fraud to your bank, but those funds have already left your account. You’d have to wait for the bank to resolve this. In the meantime, if you have bills to pay, you’ll be left asking for an extension while your bank investigates.

Build Up Credit

Your credit score affects everything from your interest rate for a new vehicle, to whether or not you qualify to rent, and even your job, if your career requires a specific clearance. Even having zero credit can be very harmful for your finances. You will end up having to cosign your loan with somebody, or you could be hit with a high interest rate.

You don’t even have to use your credit card all the time to build a healthy credit score. Instead, start with one credit card, spend $100–$200 a month on it, and pay it off each month. Look for a card that comes with free credit score monitoring so you can keep track of your score.

Get Free Money

Even if you aren’t interested in the world of credit card rewards, it’s simple to get cash back for your purchases. Some cards will offer a higher percentage of cash back for certain types of purchases, like groceries, dining, or gas. Others have a flat rate cash back percentage on all purchases, so you don’t have to worry about bonus categories. Either way, you’re getting money back on purchases you’re already planning on making. (See also: Best Cash Back Credit Cards)

Get Free Travel

Collecting credit card rewards points for travel doesn’t have to be complicated. Get points or miles for the purchases you make on your card, redeem them for statement credits toward travel purchases, or use the points to purchase travel. The best part about travel rewards credit cards is the sign up bonuses that you can collect when you get a new card. My husband and I earned a free trip just by switching our regular spending to a new card for a few months. (See also: How Travel Rewards Credit Cards Really Work)

Take advantage of these promotions and bonus points to travel your dream destinations more affordably. Once you get married and have kids, it is harder to see the world.

Purchase Protection

Credit cards have an amazing number of protections in place. Purchase protection protects against theft and damage. Price protection allows you to get a difference on an item’s price if it goes down shortly after you’ve bought it. Extended warranty automatically extends the warranty on your item up to an additional year. Some even have return protection, which allows you to get a refund even if you’ve been denied a return from the vendor.

Interest Free Financing

Many cards offer 0% intro APR on purchases for 6-18 months. This means that you can pay off a large purchase over a year and half, with no interest. The important thing to remember though, is that you have to be committed to paying it off during that time. It’s never wise to accrue credit card debt, pay interest, and live beyond your means. But getting an interest-free loan for 18 months if you are certain you can pay it off, is a great deal.

Car Rental

Most car rental vendors will require a credit card. Even better is that many credit cards also come with rental car insurance, which will save you money on your rental.

Avoid Fees While Traveling

Instead of paying an exchange rate for cash when traveling abroad, use a credit card with no foreign transaction fees. It has the benefit of being safer than carrying cash, and has built in fraud and purchase protections.

Benefiting From Credit Cards While Staying Out of Debt

Even with all of the benefits a credit card can bring, “25% of Millennials describe credit cards as something that worsens their financial standing,” according to one study. It is true that credit cards can dig you deep into debt and financial problems if you aren’t careful. Here are three ways to reap the benefits without falling into debt.

• Balance Credit Cards Like Checkbooks: Past generations used to balance their checkbooks by writing down every expense, making sure they knew how much was in their checking account at all times. Modern technology has made this practice archaic, but it still can be useful. Every time you spend money on your credit card, subtract it from your checking account either with the help of an app or pen and paper.
   
• Use Credit Cards to Pay for Usual Bills: You can earn points without spending more than you already do each month. Pay your bills online through a credit card or use one solely for gas or groceries. Take advantage of cards that offer extra points for spending in a certain category.
   
• Don’t Let Credit Cards Change Your Spending Mentality: Credit cards can give us the false illusion that we have more money than we actually have to spend. Don’t fall victim to this. Still stick to a strict budget and only splurge what you have set aside specifically for spending.

It is great that Millennials are trying to avoid debt more than the other generations. However, avoiding debt does not mean you have to avoid credit cards. Use credit cards to your advantage to make your everyday spending go a little further. (See also: How to Save an Extra $1,000 a Year)

What is your favorite credit card to use?