Many people make the mistake of thinking that they don?t need a credit card. While credit cards have gotten plenty of people in trouble in the past (myself included), they are nothing to be afraid of when used responsibly and appropriately. In fact, I believe they can be one of the most valuable financial tools you have available to you as long as you understand what you are doing.
However, if you’re struggling with debt then you may want to consider other financial tools until you’re able to get your debt paid off. That said, the rules for using a credit card responsibly are pretty simple, and should be easy to follow:
- Pay off your balance in full each and every month
- Don?t purchase things you can?t otherwise afford
- Your credit line is NOT the same thing as cash, so don?t treat it that way
As long as you are smart about your use of a credit card, there is no reason not to have one or two at your disposal. In fact, there are some very good reasons to have them in your wallet such as earning rewards though cards like the US Air?card. Here are three reasons why you should consider having a card of your own.
#1 ? You Need a Credit Card to Establish Good Credit
Using a credit card regularly, and then paying off the balance on time, is a great way to establish and improve your credit score. It will show future creditors that you are a worthy credit risk and that you have a history of paying your bills on time and in full.
If you don?t use a credit card at all, it’s possible you won?t look as desirable to creditors down the line ? even if you are responsible with your money. If you do run into this it’s possible that it could make it difficult to get a decent rate on a mortgage, to a car loan as well as other important purchases.
#2 ? For Use in an Emergency
If you have an expense come up that you are not expecting, having credit available to you might come in handy. I believe that having an emergency fund?is usually preferable, but it may be the case that something completely unexpected comes up and you need access to something immediately. This could be something like needing to purchase airline tickets due to a family emergency?to needing major car repairs. That said, if you don’t know where the cash is going to come from to care for said situation, using your credit card should be considered the last resort.
#3 ? Purchase Protection
Most credit cards include some purchase protections and guarantees that might be lacking on a regular debit card. These features will vary from card to card, so make sure to find out what your card offers when you sign up for the account. In a world where fraud and other identity crimes are a bigger and bigger problem, using a credit card can provide you a layer of protection from trouble.
No method is foolproof, of course, but you may find that you have more recourse with a credit account than you do when using debit. It can be somewhat easy to get a credit card if you have a decent credit score, so it generally makes sense to have one -?even if only on an emergency basis. As long as you understand all of the terms on your card, and you make your payments in a timely fashion, credit can be a valuable part of your financial life. This is also not to mention the other benefits you can reap from credit cards with things like rewards, like through the Barclycard Arrival, you can earn from your normal spending. 🙂
What are some other reasons why you think you need to have a credit card? Do you have an emergency fund, or do you use your credit card as your emergency fund?
Photo courtesy of: Images Money
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