You Don't Need a Credit Card to Have Good Credit
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Here's something ironic: Despite being a reporter for Money, I don’t have a credit card. And if I have it my way, I probably never will.
Though I understand that credit cards are one of the most popular financial tools out there, I have concerns about using them. However, I know having good credit is important for milestones like buying a house, securing favorable rates and even getting a cell phone contract, which is why I've made it a goal to build credit in other ways.
Here's why I'm avoiding credit cards — and what I'm doing instead.
The cons of credit cards
First, the facts: Research shows Americans collectively owe nearly $1 trillion in credit card debt. The average cardholder carries over $5,700 in credit card debt alone — debt they often have trouble paying off, thanks to high interest rates.
I’m not alone in my feelings. Millennials set a precedent of credit-card wariness after the Great Recession; as they've come of age, Gen Zers have picked up the aversion to taking on new debt, opening fewer credit cards than previous generations and turning to “new age” fintech tools like buy now, pay later services.
Younger folks who do have cards are accumulating debt at an alarming rate compared to other age groups, too. The average Gen Z credit card holder (under age 25) owes over $2,800 in credit card debt already, according to an April report by Experian. The growth in Gen Z debt has been faster than any previous generation’s.
All of this gives me pause. At age 25, I'm not inclined to voluntarily take on more debt.
