Considering the number of financial issues that have been thrust upon them by older generations, Millennials have been forced to adapt and learn how to be financially savvy, whether they like it or not. But a new NerdWallet survey reveals that, while these money-saving efforts might be well-intentioned, some habits — specifically relating to credit cards — might be hurting Millennials more than helping.
This generation, considered to be adults currently between the ages of 18 and 34, appears to be making two major mistakes: applying for a credit card without having the minimum qualifications, and avoiding credit cards altogether.
As NBC News reported, nearly 50% of all Millennials have applied for a credit card because of an advertisement or limited-time promotional deal. The good news is that credit card companies are still monitoring qualifications closely, so that the country doesn’t experience another major financial crisis similar to that of 2008. This means that Millennials who fail to meet the qualifications aren’t getting approved for credit cards they can’t handle.
The bad news is that, whenever a person applies for a credit card, his or her credit score is affected, slightly more so when the line of credit is denied. Add up multiple applications over a short period of time, and the individual will begin to see a low credit score for no apparent reason.
The other major problem that Millennials are making, TIME stated, is that they’re avoiding credit cards entirely. Almost one-third of this generation has never applied for a credit card, according to the NerdWallet data, and this negatively impacts one’s credit score as well, because 15% of a person’s total score is based on his or her credit history length.
Many financial advisers believe that these two problems are exacerbated by the fact that Millennials are, quite often, choosing the wrong company or type of card when they finally do apply for a credit card. These young adults are particularly astute when it comes to seeing through temporary promotional offers and too-good-to-be-true promises; instead, the majority of Millennials (60%) value factors such as customer service and convenience.
While that predisposition is beneficial in most cases, it also means that credit card companies can win over Millennials easily by ensuring that a friendly and persuasive sales rep is taking care of them.