10 Mistakes Millennials Make With Credit

Millennials are usually referred to as people born between 1982 and 2002. These are people who grew up with technology. Information is at their fingertips 24 hours a day. No previous generation has had easier access to financial planning tools to help them plan for their future.

There is also a downside to being part of the millennial generation. While much-needed information is available, this generation is getting mixed signals when it comes to their future. Many were told that they were guaranteed a well-paying job after graduating from college, which led them to take out student loans without thinking about how to pay for them after graduating from college. Millennials are also susceptible to identity theft and, perhaps because they are comfortable with technology, tend to be less careful with their personal information.

Millennials have a lot to learn when it comes to protecting their credit and building a comfortable future. By avoiding mistakes and capitalizing on money saving options, you can secure a brighter future.

10. Excessive spending

Spending more than you can afford is always a mistake. Millennials tend to overspend due to the simple lending practices of some credit cards. While those who build their credit should always have and use credit cards, they should never spend more than they can pay.

9. Incomplete payment of credit card balance

Credit card companies make money by charging interest from their customers. Some cards even charge extra for each month the balance is not paid in full. A person who uses a credit card wisely should be able to use their cash reserves every month to avoid these fees.

8. Avoid Credit Cards

Some millennials think they’re better off without a credit card. Their idea is that if the card is not owned, it cannot be abused. Unfortunately, credit reports are based on smart spending choices, not no spending.

7. Not using bonus programs

Credit cards get a lot of attention, but in fact, many of them are extremely beneficial. Many offer many rewards and benefits. Before taking on a new credit card, millennials should research the best rewarding credit cards on sites like TopTenReviews. Some rewards may include an IRA contribution, gift cards to popular stores and restaurants, or money to pay off an existing balance.

6. Using payday loans

Predatory lending practices are never more common than payday loans. These institutions charge exorbitant fees for even the smallest loans. If an individual cannot repay the loan on time, they simply add more to the already high price. FTC offers more information.

5. Student loans

One of the biggest puzzles for millennials is how to pay for college. No one argues that higher education is not important. Higher education is necessary for both personal growth and future career. However, the cost of college is only going up. However, there are alternatives to student loans that should be carefully considered. Many states offer tuition assistance for residents who meet certain assessment or financial requirements. This may require attending a junior college for a couple of years before transferring to a university. Members of the armed forces can use the G.I. Bill to pay for schooling. Some colleges and universities offer training assistance to their employees. Working full-time while attending college part-time is also a smart choice to avoid a devastating student loan bill.

4. Buying the wrong house

Millennials benefited from the bursting of the housing bubble, which they may not understand. In recent years, it has been relatively easy for anyone to get a mortgage, whether or not they could afford to make the payments. Now home lending practices have become tougher and people are being forced to make more conservative decisions when considering a new home. Millennials should take the time and care to find a starter home that fits their needs and budget, as well as pay attention to resale value and any repairs that could eat into their wallets.

3. Don’t buy a house

Renting is sometimes the best option. This is true for those who do not have a stable job or who may face the need to move within the next three years. While rent and payment on time can help increase credit, it does not contribute to capital growth. In most cases, it is better to own than to rent.

2. Overspending on vehicles

Some millennials may choose not to own a car, relying instead on walking, biking, or public transportation. However, this is rare, as most people need or want their own vehicle. One of the biggest mistakes millennials make is choosing a car they don’t need. A single person probably doesn’t want a $40,000 SUV that gets 16 mpg.

1. Don’t save for retirement

The biggest mistake millennials make is one that won’t be felt for 40-50 years. Saving for retirement can seem almost impossible for someone just starting out, but even the smallest amount of savings can help in the long run. According to Research Institute for Employee Remuneration, the average American saves only about $25,000 for retirement. This is mainly because they start saving too late. Even saving $100 each month is a good way to start, although millennials need to maximize their annual contributions in the long run.

Chris Lindsey is a writer with a passion for credit, finance, business, and technology. He is a golf fanatic and enjoys relaxing on the lake.

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