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Mastering Credit Cards: Avoiding Common Millennial Mistakes

As I’ve ventured into the world of credit cards, I’ve come to realize the importance of understanding the ins and outs of these financial tools. With my limited experience using reward-heavy credit cards, I knew I needed to learn more. I had the opportunity to sit down with Sean McQuay, NerdWallet’s resident credit card expert, to discuss the common mistakes millennials are making with credit cards and how to overcome them.

The Biggest Mistakes Millennials Are Making

Sean McQuay highlights four major mistakes millennials are currently making with credit cards:

1. Not Utilizing Credit Cards: Many millennials are hesitant to use credit cards, unaware of the benefits they provide. Sean emphasizes that credit cards can increase payment ease and security, while also offering valuable rewards.
2. Misconceptions About Credit Cards: Some millennials believe credit cards are loans that should be avoided. However, Sean clarifies that credit cards can be free to use if you pay your balance in full every month.
3. Limiting Credit Card Use to Emergencies: Credit cards are ideal for day-to-day spending, offering more security than cash or debit cards and providing rewards for regular use.
4. Ignoring Credit Building: Many millennials think they don’t need to build credit because they don’t plan to buy a car or home. However, Sean stresses that building credit is essential, as landlords and potential employers often check credit scores.

Solutions to Common Credit Card Mistakes

To combat these mistakes, Sean offers the following advice:

1. Find a Credit Card That Matches Your Needs: Choose a credit card that earns points on your regular purchases and provides useful rewards. Use it for everything to accumulate points, and pay your balance in full every month.
2. Don’t Overlook Cash-Back Cards: Cash-back cards can offer rewards at comparable rates to travel cards, with higher redemption flexibility.
3. Managing Credit Card Debt: If you’re struggling with credit card debt, consolidate it onto a balance transfer credit card to minimize interest payments, and work diligently to pay off the card in full before the 0% offer expires.

By understanding these common mistakes and implementing Sean’s advice, millennials can harness the power of credit cards to improve their financial lives.