Common Credit Card Mistakes Made by Georgia Millennials

Historically credit shy, more and more Georgia Millennials are now using credit cards. Unfortunately, they are making some common mistakes.

The oldest Georgia Millennials are now in their early thirties, but it seems like a lot of them are still making credit card mistakes. As a whole, this generation is still notoriously credit shy. In fact, according to a recent Bankrate study, 63% of Millennials don’t use credit cards. However, many young Georgia adults who have credit card accounts end up overusing credit because they don’t really understand it. For example, one-third of Millennials surveyed by Experian didn’t know the spending limits on their credit cards. Sadly, this lack of awareness can lead to financial disaster and credit score ruin. Also, this isn’t the only credit card mistake commonly made by Georgia Millennials.

Proof that Many Georgia Millennials Don’t Fully Understand How Credit Cards Work

Representing about 25% of the population in Georgia, Millennials get a lot of attention in the marketplace. Outnumbering even Baby Boomers, the Millennial generation has a lot of spending power. Unfortunately, when it comes to spending money on credit cards, many of these young adults, according to several surveys and polls, are still making poor decisions.

Too many Georgia Millennials open store credit cards just to get discounts or rewards.

Even Millennials who are hesitant about using credit are sometimes enticed by store credit card promotions. Usually, these perks include immediate discounts as well as ongoing price breaks on merchandise. The problem is, however, that most store credit cards come with very high interest rates – usually 20% or higher. Therefore, unless Georgia store credit card users pay the card balances off every month, their savings are quickly eaten away by interest charges.

Georgia consumers who are new to credit may not know that credit checks affect their credit scores.

Every time Georgia consumers apply for a loan or a credit card, a lender or creditor checks their credit reports and credit score. This causes a “hard inquiry” to show up on their credit reports. Every hard inquiry costs consumers a few credit score points. However, if a Millennial applies for several credit cards at once, this can cause significant credit score damage. This kind of activity can also make lenders think that you are desperate for credit and are, therefore, a risky borrower.

Millennials who embrace credit cards often treat them like cash.

Too often, young Georgia consumers use credit cards without thinking of the debt involved. Only later, when the bills come, does the reality hit home. Instead, Millennials should think of credit cards as credit building tools. Especially in the beginning, all credit card spending should be strategic and controlled. For example, deliberate credit building with a credit card might involve one necessary expense per month. Some Georgia consumers who want a better credit score only charge their gas to a credit card, then they pay off the bill at the end of the month. This way, they boost their credit scores without building debt.

Some Georgia Millennials use their first credit cards to buy items they can’t afford.

Again, this comes from not really understanding how credit cards should work. Here is a hypothetical scenario that is all too common among Millennials. A young professional sees a pricey lamp that she really likes in an upscale boutique. She doesn’t have $500 to spend on the lamp, but she has a credit card with a $1,000 spending limit. In this young professional’s mind, this translates to “I have $1,000,” so she buys the lamp. Of course, after making minimum payments for several months, the pricey lamp gets even pricier with interest charges added. This hypothetical young Georgia professional also brings her credit score down when she buys the lamp by bringing her credit utilization rate to at least 50%.

Most Millennials in Georgia either don’t have a credit card or have too many.

For some reason, a popular mindset among Millennials is “all or nothing.” This may explain why many of the young people who have credit cards have too many. Alas, juggling multiple credit cards is dangerous for Georgia consumers who are new to credit use. For one thing, it is difficult to keep up with several due dates. Also, spending easily gets out of control with three or more credit card options available.

A high percentage of Millennial credit card users carry high balances.

Remember the luxury lamp enthusiast who used up half of her credit card spending limit with one purchase? This is a bad move for any Georgia consumer because, ideally, no one should use more than 30% of their available credit at any given time. Your credit utilization rate is factored into your credit score because lenders are typically wary of borrowers who seem too reliant on credit. Of course, if the Experian poll mentioned above is accurate, one-third of Millennials don’t even know their credit card spending limits. Therefore, it is unlikely that they are keeping up with their credit utilization rates.

Another Way for Georgia Millennials to Stay on Track with Credit Cards and Improve their Credit Scores

Once you start using credit, you should regularly check your credit reports. For one thing, monitoring credit report activity is a good way to spot signs of identity theft. Now, in the wake of the Equifax data breach, it is more important than ever for Georgia Millennials to stay on top of their credit reports.

Next, all Millennial credit card users should be aware of the fact that creditors and credit reporting bureaus often make mistakes with consumer information. These mistakes frequently cause credit report errors, and some of these inaccuracies can harm credit scores.

While checking your credit reports, if you spot suspicious items or errors, contact Credit Repair Lawyers of America in Georgia. Once you do, you’ll have access to a team of credit pros and an experienced credit repair attorney who will clean up your credit reports for FREE.

The Free and Legal way to Get Better Credit

Don’t let fraudulent accounts or errors on your credit reports bring your credit score down. At Credit Repair Lawyers of America, we’ve been cleaning up credit reports for consumers since 2008 for free. How do we do it? All of our fees come from the defendants in settled cases. This is why our clients pay nothing for the work we do.

Let’s start the conversation about what we can do for your credit. Set up your free consultation today by calling Attorney Gary Nitzkin at (404) 591-6680 or sending him a message through our contact page.