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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I like using my card for the ease of budgeting! You can easily budget when you only use one card, but the protection which comes from cards is also great.
We’re similar in that Grayson. It can be a little more difficult when you’re actively churning, but it helps us stick to what we have budgeted better.
I write about travel hacking for a living so I have other uses for credit. Still, I think the reasons you pose are valid. There are plenty of reasons to maintain your credit and push for a better score.
Completely agreed Holly. Plus, the rewards are pretty nice as well. 🙂
I have a number of clients who have so much student loan debt that they are scared of getting a credit card, but then their credit score is non-existent because they haven’t started to build their credit. Student loans will not do it on their own.
I’ve seen that as well Shannon. I understand it, on one level, but if they have little to no credit score, it’s only going to cause problems for them in the future.
I love credit cards. I agree with your points, but like you said, using a credit card for emergencies should be the very very last resort. The last thing you want during an emergency is a new pile of debt. These are great reasons though. Thanks for the post!
Completely agreed Kalen. I would only say that’s ok in a dire circumstance like a sudden family emergency, but try all you can to go with an EF.
Hey John, I agree that credit cards are important. I’ve written tons of articles on how to build credit and secured credit cards tend to be a big piece of those articles. Thanks for the great post!
Thanks Josh! I agree, they can be a big part of it. If you use them right then they can be a great tool.
I do pay my cards off every month, but I like charging things for a lazy reason: it makes it easier to balance my checkbook. I do still compare my statement to my receipts but at least it saves me from doing as much math 😉
I also like the rewards (and my cards are all free, so they don’t cost me anything).
I like your style Christy! I’m all about making it easy and that’s a big part of why we use our cards because it makes it easier for us to stick to our budget. The rewards aren’t too half bad either. 🙂