If you're a millennial and you don't have a credit card, you're not weird and you're not alone. In 2014, the website Bankrate found that more than 60 percent of Americans age 18 to 29 had opted out of using credit cards, twice the number for people over 30. Yet one reason that number drops is because as you grow older and make bigger life purchases, credit history becomes vital. Thing is, 1 in 4 people think they're building a credit history when they're not.
NerdWallet released the stat this week, saying their research showed one-quarter of consumers believe that using a debit card can affect your credit score. This number, between 500 and 850, helps banks determine how much to charge to lend you money, or whether they should lend you money at all. Higher scores mean a smoother process and savings for you. Even if you've been responsible with money your whole adult life, without credit, it can get harder to do everything from signing a lease to landing a job.
For millennials especially, credit cards carry a lot of baggage. The economy tanked just as we were coming of age, and it may seem safer to stick with money you know you have in your checking and savings accounts — especially if it means avoiding fees. Even if we wanted credit cards, in 2009, the federal Credit CARD Act made it way harder to get one if you were under 21. Those of us who do have them find them harder to pay off: Forty percent of millennials pay their bills in full each month, and and we're the most likely age group to miss payments completely. We're also struggling with sky-high debt anyway, especially from student loans.
Debit cards do seem safer, but they can depress your credit score through lack of active building activity. If you're worried about how you'll handle credit cards, take it slow in the beginning — consumers of any age can get credit cards with limits as low as $200. Credit cards also offer more consumer protections than debit cards overall, like fraud liability. So even if the thought of playing the game that's harmed so many people during your lifetime makes your palms sweaty, you have the chance to be responsible about credit cards from the beginning. Start small to build your confidence, and lay the groundwork for big purchases down the road.