So….do you need a credit card?? This is the question so many people are asking themselves today. They know that a credit card can get them into financial trouble, and they hear this Dave Ramsey guy telling them to cut them up if they’ve got ’em… But then their friends, co-workers, and even their family are whispering in their ear that they should probably get a credit card…or maybe two or three…
So who’s right? Do you need a credit card or not?
Do You Need a Credit Card?
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Let’s just get right down to it. The question posed here…do you need a credit card… There are only a few things we really need in this life.
- And maybe a solid friend to keep you going
Do you need a credit card?
No. You can definitely survive without one.
Instead of a credit card, you could use:
- debit cards
- crypto-currency (if you believe in this sort of thing…I personally don’t…yet)
Heck, you could even barter and make trades for goods if you wanted to. There are so many ways you can buy things today even if you don’t have a credit card.
But, what if instead of the phrase, “do you need”, we insert a little less direct “should you have” into this question?
Should You Have a Credit Card?
Alright, now we’re in a whole different scope of a conversation here. Sure, we can survive without a credit card, but should we?
The big cons of having a credit card — most of us know them…
- We might be less prone to save because we have a credit safety net
- We’ll probably spend more because spending future money is easier than saving up money to buy something
So, if you’re prone to spending more than you make and you know a credit card will just tempt you into making bad decisions, then you should definitely steer clear of them.
But, for the majority of us that can handle a credit card without driving ourselves deeply into debt, would it be wise for us to own a credit card? Are there really that many benefits of owning a credit card?
Let me be perfectly honest here… I use credit cards. And, I love the benefits they offer. But, there are actually wayyyy more reasons to own a credit card than I even realized just a few days ago!
Let’s dig in and see if owning a credit card is right for you.
14 Reasons to Carry a Credit Card
Have you been thinking about applying for a credit card lately? I personally don’t think you need to run out and get one today, but if you find a solid credit card with many benefits, then yeah, why not get one?
I mean, check out all the reasons below to own one. It’s actually a little crazy…
1) Build Your Credit Score
If you have no credit score or have a low credit score, one of the best ways to build it is to:
- get a credit card
- spend half of the spending limit or less each month
- pay your bills on time
Why might you want to build a credit score?
According to NerdWallet,
“If you don’t have a credit history, it’s hard to get a loan, a credit card or even an apartment.”
Yup, all true.
I wouldn’t recommend that you go into debt to buy furniture, appliances, or even a car. But, there are plenty of reasons to have good credit. One of the major ones is actually our next benefit…
2) Buy a House
If you want to buy a house in your lifetime, you’re probably not going to do it with cash. So, you’ll need to get a loan to come up with the majority of the money for the purchase.
And how do you get that loan?
By going to the bank.
And how do they check to see if you’re loan-worthy?
Mainly, by checking your credit score.
Sure, there are a few places that actually do manual under-writing and will still work with you even if you have no credit score, but there’s definitely more of a hassle-factor…and they still might not accept your loan request.
In my opinion, it’s best to take control of your own destiny and build up your credit.
3) Cheaper Car Insurance
I was just talking to my Dad the other day. His friend is a die-hard Dave Ramsey listener, so naturally, he doesn’t own a credit card – never has. The average car insurance cost in our area is about $700-800 a year. But, since he had no credit score, guess what he was paying?
$2,100 a year…
Since he felt like he was being ripped off, he actually disputed this quote and called it discrimination against non-credit card users. They took 10% off the quote. Big whoop. He now owes $1,900, which is still $1,200 more than the typical person with a credit card.
Wouldn’t it just be easier (and way cheaper!) to have a credit card and be responsible with it?
4) Rent a Car
What a hassle factor this is.
Call up a rental car company and let them know you’ll be paying with a debit card. They might say, “Yeah, that’s fine. No worries.” And then on the day you need to rent the car, you walk up to the counter and find out that they only accept credit cards. Either that, or they’ll need to charge you a huge deposit fee since you’re paying with a debit card…
Does this make any sense? Absolutely not.
But am I, a single person with basically no power, going to change the entire rental car industry?
So, I just suck it up, put a couple of credit cards in my wallet, and enjoy the car rental in peace.
5) First Dibs on Concert Tickets
I honestly didn’t know this was a thing until the other night when my wife and I were trying to score some floor seats to a Jim Gaffigan show.
I got an email that there were pre-sell tickets available a couple of days before they opened up to the public, and I was invited to check them out online with a special code.
- I had the code,
- found the seats that I wanted,
- …and then I was annoyed that I couldn’t buy them. They could only be purchased by American Express credit card holders.
I could have gotten the tickets earlier, direct from the venue, and for a cheaper price if I had that card…
6) Reward Points
This is a reward that everyone knows about. Most cards offer rewards points today – some of them even offer 2%-3%, which is actually kind of crazy if you think about it!
- Find a solid card with great rewards,
- pay your bills in full each month, then
- reap the rewards with travel points, gift cards, or sometimes even cash!
Related: Top Rewards Credit Cards
Credit card companies hate losing money, so one of the best ways for them to protect against a monetary loss is by protecting you from fraud.
By tracking your spending patterns and habits, they can pretty quickly detect when a charge is out of the ordinary and should be shut down before it even starts. By having a credit card, you could be protected from fraud before it even happens.
Pretty cool, right?
8) Identity Theft is Easier to Deal With
Once in a while, the credit card companies do accidentally let a few charges slip through the cracks.
While it sucks to see a charge on your credit card that’s not yours, all you have to do is…
- call the credit card company,
- tell them which charge isn’t yours, and then
- don’t pay for it when the monthly bill comes.
Soooo simple. It’s a beautiful thing and it’s way simpler than trying to fight for your money back from the banks.
9) Purchase Protection
Most people don’t really know that this exists. According to NerdWallet, purchase protection…
“…ensures goods against theft or accidental damage for a limited time.”
So basically, if you buy something and it gets stolen (coverage is typically within 90-120 days or less of your purchase)…
- you can call up the credit card corporation that you bought the product with,
- submit a form with the appropriate receipt copies and detail, and then
- get all your money back!
Dang, another really cool benefit of having a credit card!
10) Less Need For Cash
My sister-in-law loves the beach – she’s there at least every weekend during the summer. She’s usually pretty good about hiding her important belongings in the car when she goes, but on one occasion she was a little careless.
She left her purse on the passenger seat in plain view…
After a solid hour of sun-soaking, she came back to her car, hopped in, looked for her purse and discovered broken glass in its place… A passer-by decided they needed it more than she did, knocked out the window, and immediately went off on a shopping spree.
- Her cash….long gone.
- But her credit cards? For the most part, she was able to cancel them in time and took no financial hit at all.
- And, even if someone did charge the cards for a few random things, she still wouldn’t have been liable for those expenses.
But the cash, you’ll never get that back…
I personally carry about $40 on me at any given time. That’s it. If you have a few credit cards (that pretty much everyone accepts these days), there’s no need to carry any more than that.
Ever travel to another country that operated under a different currency than your hometown? Naturally, you would have had to find a cash exchange place – either at the airport or somewhere randomly in town – and then physically lay your country’s currency on the table in exchange for the home country’s currency.
Well as you may know, this exchange certainly isn’t free! It usually costs between 1%-3% of the total exchange. If you’re spending a few weeks away and solely use cash, that can get pretty pricey!
If though, you can get by with a credit card during your foreign stay, you’ll likely pay very little in fees. Heck, with certain cards, they actually make the exchange automatically for free!
Do you need a credit card? Still no, but man it’s sure making life easier isn’t it??!!
12) 30-Day Interest-Free Loan
While this is technically a benefit, I’m not a massive fan of it. Yes, I buy things and I don’t pay for them until 30 days later when my credit card bill comes due, but I buy them because I already have the money in my bank account and I need it…not because I figure I can scrape the money together in 30 days even though I might not have it today.
Use your credit card wisely. While the delayed payment is a financial benefit, don’t abuse it. In fact, you might actually want to ignore that this option is even available.
13) Track Your Spending Online
Remember just 20 years ago or so? When we had credit cards and debit cards, but we still had to track our spend manually and then reconcile our transactions to a monthly bank statement later? It was kind of a hassle, and honestly, most of us just didn’t do it because of the added time and effort it required. We basically just hoped the bank and the credit card company got it right!
Today, all of our spend is available to us in real time (basically). We just have to hop online (via our phone or laptop) and check the charges once in a while.
- If they look like ours, no big deal.
- If they don’t, we’ll call the credit card company and tell them there’s a fraudulent charge on the account…and then we just ignore it and never pay it.
Life is super simple today in this regard. I absolutely love it!
14) Rental Car Insurance
Did you know that some credit cards offer rental car insurance? That’s right! Instead of paying the ridiculous $25/day insurance rate through the rental car place, you could just ignore their crazy-high insurance prices and just depend on your credit card to take care of it if you ever got into a wreck!
(And honestly, some of the car insurance companies would cover you in the event you got into an accident, too.)
The moral of this story is to check to see if your credit card (or insurance company) will cover you in the event of a rental car accident. And if they do, STOP PAYING EXTRA to the rental car company!!
We Use Credit Cards and It’s Fine If You Do Too
My wife and I….we use credit cards. And you know what? We aren’t deeply in debt because we’re lured into hundreds of thousands of purchases that we don’t really need.
- We’re responsible,
- we don’t ever buy something because of the rewards points, but
- it definitely benefits us to have a couple of credit cards.
Would I rather not use a credit card? Sure. But, because our world rewards those that have them and penalizes those that don’t, it only makes sense to own one or two and use them responsibly.
Do you have credit cards? When do you use them? Do you ever feel like you spend more because of them?
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.