Five Credit Card Practices Gen Z and Millennials Should Avoid

Credit cards can help younger borrowers build credit history and manage purchases when used responsibly. Forbes contributor True Tamplin said they can also raise costs quickly if balances increase, payments are missed, or interest compounds.

Tamplin wrote that carrying a balance from month to month is not required to build credit. Responsible account activity and on-time payments matter more, he said. Using a card for purchases already covered by cash flow and paying the full statement balance by the due date avoids interest charges.

Making only the minimum payment keeps an account current but directs most of the amount toward interest rather than the principal. Tamplin stated that paying more than the minimum whenever possible reduces the balance faster and lowers total interest paid.

Setting a specific payoff target, such as clearing the debt in 12 to 24 months, shifts focus from staying current to reducing debt.

Credit utilization measures the portion of available credit being used. Tamplin noted that a high utilization rate, such as 75 percent on a $2,000 limit, can signal financial strain to lenders and may affect future loan approvals. Keeping utilization near 10 percent and maintaining an emergency fund can limit reliance on credit for unexpected expenses.

Rewards such as cash back or points provide benefits only when balances are paid in full each month. Tamplin said interest charges at average rates of 11 percent or higher can outweigh reward value. Prioritizing interest reduction over reward pursuit avoids turning credit card use into an unintended borrowing strategy.

Opening several cards in a short period can increase the number of hard inquiries and lower the average age of accounts. Tamplin stated that each new card adds separate due dates, limits, and terms that must be tracked. Using one card that fits current needs and managing it consistently supports gradual credit building without added complexity.

True Tamplin concluded that credit cards function best as payment tools rather than substitutes for income or emergency funds. Paying on time and aiming to clear the full balance each month helps maintain credit while limiting debt accumulation.