Financial analyst: Millennials are making a mistake by not using credit cards


Eating well seems to be a millennial value. According to Bankrate, young people are spending more than other generations on everyday purchases like groceries and gas, as well as on experiences like dining out. And, the site's chief financial analyst Greg McBride says, young people are missing out by not using credit cards to make those purchases.

"Those basic bills represent rich opportunities to earn money back, or points that can add up to cool vacations and other rewards. So millennials might seriously want to consider putting more of their everyday spending on credit cards," Bankrate writes, adding that rewards cards are "free money."

"Focus on cards that have the highest payouts in the categories where you spend the most. This is the way to maximize the return you're getting on everyday spending," says McBride.

Millennials spend $9,568 a year on groceries, Bankrate found, and an additional $2,796 on restaurants, more than any other generation. They also devote more resources to gas and cellphone service. In total, "millennials spend $2,300 more per year on those categories, on average, than older generations do."

Older consumers, by contrast, spend more on television and travel.

Still, not everyone agrees that credit cards are the answer.

As CNBC has pointed out, the best cards can save you $1,000 or more a month. If you can play by the rules, buying basics with plastic can indeed be a good deal for the present, in terms of perks, and in the future, in terms of building credit.

Credit cards can also lead to dangerous amounts of high-interest debt, though, which is why Mark Cuban and Jay Leno both say don't bother.

"I barely use credit cards," Leno tells CNBC Make It. "I don't carry any debt. I don't write checks at the end of the month for anything." Not even for a mortgage, he adds: "I didn't buy my house until I had cash."

Cuban concurs. "Credit cards are the worst investment that you can make," he says. "The money I save on interest by not having debt is better than any return I could possibly get by investing that money in the stock market."

Since not everyone has enough cash to function that way, however, credit cards can be a useful tool when handled correctly. Even self-described "credit card geeks" Pedro Pla and Grace Cheng urge caution. As they told CNBC Make It, "carrying a balance and paying interest defeats the whole purpose of getting more for your money without spending more. We always pay off our credit card bills automatically in full each month, so we never had to pay any interest fees for using the cards."

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