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Fair Isaac Corporation (FICO), Bank of America Corp (BAC): The Huge Mistake Millennials Are Making With Their Money

  • Prudent credit card use is the best way to establish a credit history that can help you improve your chances of qualifying for a mortgage, obtaining a car loan, or even seemingly unrelated things like getting a job.
  • Certain transactions are a major hassle without a credit card. For car rentals, for instance, companies will often debit your checking account immediately for a deposit, yet a credit card authorization is sufficient without an immediate charge for credit card users.
  • Many credit cards offer much more lucrative rewards like cash back or airline miles than you’ll find with debit cards.
  • The threat of future debit-card fees still exists. Even though Bank of America Corp (NYSE:BAC), Wells Fargo & Co (NYSE:WFC), and Citigroup Inc (NYSE:C) all backed down from test programs or plans to start imposing fees for debit cards a couple years ago, there’s nothing stopping them from potentially doing so in the future.
  • Many millennials answer these objections by arguing that they don’t want to add to their debt levels. Yet there’s no requirement that you misuse credit cards by carrying a balance. One strategy you can follow is to treat credit cards exactly as you would debit cards, entering every purchase in your checkbook and taking the money mentally out of your account. Then, all you have to do is make your payment in full every month to reconcile your account balance and get all the benefits of credit cards without any of the hassles.

    Give credit a try
    Not carrying a credit card balance is smart, but not having a credit card at all is a big mistake. If millennials are prudent enough to live without credit cards entirely, they should be able to avoid temptation once they have one — while reaping the potential benefits that can come in handy from time to time.

    The article The Huge Mistake Millennials Are Making With Their Money originally appeared on is written by Dan Caplinger.

    Fool contributor Dan Caplinger owns warrants on Wells Fargo and (NYSE:WFC) Bank of America. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends Bank of America and Wells Fargo and owns shares of Bank of America, Citigroup, and Wells Fargo.

    Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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