It might be time to rethink how you pay for your smallest expenses.

By Stacey Leasca
September 17, 2018

Millennials aren’t what they seem. At least when it comes to money.

The rather nebulous grouping, which often includes anyone born between 1980 and 1996, has caught a pretty bad reputation over the years as being lazy, entitled, in love with technology, bad with money, and even responsible for the death of everything from department stores to mayonnaise. And some of those things may be true (whatever, mayonnaise is kind of gross anyway), but how poorly Millennials are doing with their finances is a flat-out fallacy.

Not only are Millennials saving way more money than people think, but they also apparently have a far deeper understanding of how credit card rewards work than the rest of the population.

According to a new survey by CreditCards.com, 45 percent of consumers who own rewards credit cards say they’d rather use cash for purchases under $10. In fact, the survey of 1,000 consumers found that the idea of racking up credit card points or miles wasn’t enough to incentivize people to swipe rather than plunk down a few bills. The only group to buck this trend is younger Millennials.

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As the survey found, Millennials between the ages of 18-27 were more likely than any other age group to report using credit cards for purchases under $10. Many older people cited going into credit card debt as the reason they are wary of using their cards. However, CreditCards.com explained, it may be costing them precious freebies in the future.

“For example, $9 spent every day on a latte and a scone adds up to $3,285 per year,” CreditCards.com explained. “Paying with a 2 percent cash back card will put $65 back in your pocket per year.” But, if you’re paying all in cash, you’re completely missing out.

Furthermore, spending on credit may actually help people better stick to a budget because they can track all of their spending. Utpal Dholakia, professor of marketing at the Jesse H. Jones Graduate School of Business at Rice University, explained to CreditCards.com that he personally uses the Mint app to track his budgets, and all of his cards are connected to the account. That way, he can easily track how much he spends on items in a typical day, month, or year.

The only flip side, Kathy Hauer, certified financial planner and author of The 11-Step Do-It-Yourself Comprehensive Financial Plan, explained, is cash gives you a real sense for spending.

“Cash really does make you think twice about spending the money,” she said.

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And indeed she’s right: Research has found that paying with cash makes people instinctively spend less. But, if you’re saving toward a vacation, would like to get a little return on your investment, or want to be able to better track your spending, do as the young folks do and put it on a tab. This way you can rack up points for free flights, car rentals, or get a bit of cash back on every purchase. Just make sure to keep it within your personal limits. And always pay off your credit card in full each and every month if you can.