Five reasons why you should have a credit card

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Millennials. Love ‘em, don’t understand ‘em, are one of ‘em—one thing is for sure, they’ve been blamed for a lot of things. The latest on that list? The decline in credit card usage. While it’s easy to make jokes about how avocado toast consumption is (allegedly) jeopardizing the housing industry, this one did stop to make us think.

There is a lot of information out there about the dangers of credit cards—like serious debt—but there’s not a whole lot that speaks about the positive benefits of having some plastic in your wallet, especially for younger folks. When used properly, credit cards are actually an incredibly valuable tool.

Here are five reasons why you might want to rethink declining that credit card:

  1. No credit is not good credit: It can be tough to build credit—especially good credit. A credit card is one of the easiest ways to do this. Start off with a card with a low limit and use it to make your everyday purchases like gas, groceries, etc. and then immediately pay them off. By using a credit card in this way, you will start to build a credit history. And if you do it properly, it will demonstrate you are financially responsible, which can come in handy later in life when you need a car loan, student loan, line of credit, or even a mortgage. But that’s not all—some employers even require credit checks before they’ll hire you. Same goes for some landlords.
  2. Planes, trains, and automobiles: Need to buy a plane ticket? How about rent a car? And once you get to your destination, you probably need a place to stay, right? No credit card? No luck. Most airlines, car rental agencies, hotels, and other travel related businesses, whether online or not, require a credit card in order to use their services.
  3. In case of emergency: Say you’ve somehow managed to get to your destination without the use of a credit card and something goes wrong. You might not be able to access cash, but having a credit card means you always have financial backup in your pocket if things get harried and you need to get on a plane and GTHO. You don’t even need to be far from home for this to come in handy—stuff can happen at any moment that may have financial implications. By having some plastic available in case of emergency, you’ll have your bases covered.
  4. Financial literacy: To be clear, owning a credit card doesn’t also come with magical powers of financial literacy. But a credit card can act like a gateway into the world of personal finance. It will teach you about interest rates, budgeting, and how to build credit responsibly (see number one).
  5. Reward yo’self: For as many credit cards as there are available, there are reward programs, too. Want rewards to put toward travel? Free groceries? Gas for your car? Cash back? There’s a card for that. If you’re going to be spending the money anyway, you might as well make sure you’re being rewarded for it. Some credit cards even offer additional perks like first-dibs on concert tickets, insurance for rental cars, and other benefits. It’s all about finding the right card and rewards program for you and your lifestyle.

But speaking of finding the right card, we would be remiss if we didn’t mention one final thing: Every time you open a credit card, that’s reflected in your credit score. And this is one of those times where too much of a good thing can actually work against you.

It can be tempting to sign up for a credit card so you can get some sweet swag, but that promotional t-shirt may end up costing you a lot in the long run. Always make sure you read the fine print. This is true for anything, but it’s especially true for your finances (see number four). Make sure you know what you’re getting yourself into and what the financial consequences are before you sign on the dotted line for that free folding chair complete with built-in cooler. Or iPad. Or whatever other piece of swag is being used to sweeten the deal.

Still have questions? You can always get in touch with one of our financial experts at your local credit union. Find your nearest location!