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Is it a Bad Idea Not to Have a Credit Card

credit cards

Every generation seems to have their own take on how they should control their finances. Generation X were pretty liberal with the use of credit cards. It wasn’t uncommon for most individuals to have at least two and most likely three.   Now the millennial generation is developing a whole new pattern when it comes to credit.   This is the generation between the age group of 18 to 34 year olds.

This millennial group are shying away from the credit card scene.  Indicators are that many within this age group are not even applying for one card.  It seems that all their focus is being placed on getting a handle on their student debts.   This shouldn’t come as any surprise as there are a large number of individuals who have been out of school for several years and are still paying off their education.

So the question is does this shunning the credit card opportunities create any problems?  Well, the credit card issuers would like to think so. In some cases they may be right. Credit cards when used properly can help to build a good credit rating.  If an individual doesn’t have any credit cards then they are not building a credit history.  When the time comes that they have to apply for credit, like when buying a house for example, then no credit history could be a problem.

Most people realize the harm that a poor credit score can create, but many don’t realize what the potential damage of having no credit can do.  This doesn’t seem to make much sense when everyone is shouting from the roof tops to stay out of debt.

The credit report is used in a lot of different circumstances. Many times if you are going to make a purchase even if you are going to pay cash, you may be asked for a credit card.  When you check into a Hotel, you have to in most cases have a credit card.

Even if you are looking for a job your credit report could have an impact on whether you get it or not.

So it would seem whether you like it or not you should at least have one credit card so you can establish a credit history.   This means using it as well.   The big key to success here is how you use it.   It is important to become credit card savvy, and when you do then this piece of plastic can be used to your best advantage.

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Sam Seidman, CPA, CA, LPA
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