You're Not a Grown-Up Until You Have a Credit Card. Here's Why

A lot of people hate credit cards, and for good reasons. They make it easy to overspend and end up in very expensive debt. If you’ve had the experience of paying off credit card debt or watched someone struggle through it, perhaps you’ve come away from it thinking, “I’m sticking to cash.”

That seems to be the mindset of younger consumers. Facebook analyzed financial conversations, conducted surveys and reviewed audience data of users ages 21 to 34 and collected the findings in a white paper titled “Millennials + money: The unfiltered journey.” According to the paper, the majority of millennials (57%) prefer to use cash or debit cards instead of credit cards, and the generation seems greatly attached to the goal of living debt-free. They were asked to define financial success, and 47% said it was to be debt-free. Their most common financial priority (43%) is to pay down debt.

Point taken. Millennials don’t like debt. That’s likely a huge reason they’re relying on cash and debit cards for their everyday purchases.

But dismissing credit cards could be a big mistake for young consumers, and they might not realize why. Nearly a third (30%) of millennials “say they are not sure how credit cards could be helpful,” the Facebook paper said. Well, here’s how.

You Can Build Credit

You don’t need credit to participate in the economy and live happily, but it can make things a heck of a lot easier. Your credit rating comes into play with big financial decisions, like buying a house or car (unless you’re only using cash), but it affects a lot more than that. Bad credit or no credit could make it harder or more expensive for you to rent housing, set up utilities, get a cellphone or get insurance. It could even affect your job prospects. There are a lot of situations in which a good credit score comes in handy.

But how do you get a good credit score? One way is to use a credit card responsibly. You can start with a secured credit card (we’ve reviewed the best secured credit cards here) or ask a close friend or relative to co-sign your card application. Try to use very little of your available credit and make the payments on time. Those two things are the foundation of a good credit score.

You Don’t Need to Go Into Debt

The interest rates on credit cards tend to be much higher than they are on other credit products, like personal loans, auto loans or mortgages. That being said, you can use a credit card without ever having to pay interest. In other words, you can improve your credit score without debt.

If you pay your credit card bill in full every time it’s due, you can take advantage of what’s called a grace period — the time between when you make a purchase and actually take the money from your bank account to pay for it. During that time, you’re technically borrowing money from your credit card issuer, but the grace period allows you to borrow that money without accruing interest on it.

On one hand, it’s a great tool: You’re building credit without going into debt. But be careful: If you miss a payment, you can lose your grace period, and your credit card issuer can start charging you interest for the outstanding balance. To make debt-free credit card use work for you, you need to pay very close attention to how much you’re spending (so you can cover the bill) and make sure you’re paying bills on time.

Credit cards can be both helpful and hurtful, which is why some people take the cautious route and avoid them. Unfortunately, that can make things more challenging for you at some point. This isn’t to say everyone should have credit cards, but if you want to minimize the challenges of major adult milestones like buying a home or new car, you might want to give them a (careful) try to build your credit. You can check your progress and see two of your credit scores for free every month on Credit.com.