Do You Really Need a Credit Card?

Throughout the years I’ve come across a handful of people who didn’t have a credit card and had no intentions of getting one. And not because they had horrible credit and couldn’t qualify. They chose the safe approach, and in their minds, they didn’t see the point of plastic.

As someone who dug herself into a deep hole nearly 15 years ago, I can certainly understand the reasoning behind this choice. Credit cards are a useful tool, but they can also have disastrous financial consequences if not used responsibly.

Nowadays, just about everyone has at least one credit card in their wallet. And with the onslaught of commercials put out by credit card companies, and the tons of unsolicited credit card offers that arrive in the mail, you may feed into the hype and believe that a credit card is the adult-way of life.

But have you ever asked yourself, do I really need a credit card?

For some people the answer is a resounding yes. Many use credit cards on a regular basis to stack up reward points, and others simply like the idea of having a back up payment method in their wallet.

Everyone has his or her own reasons for getting or not getting a credit card. And it’s important that you question your motives. In the end, you should get a credit card because it’s the right move for your lifestyle or finances – not because other say you need one.

Why you may need a credit card…...

• Credit cards offer more protection than cash or debit cards. You can’t replace cash that’s lost or stolen, and if someone steals your debit card and wipes out your bank account, it can take 10 days for the bank to credit funds back to your account. A lost or stolen credit card won’t have a direct impact on your finances. Simply call your card company to cancel the card and wait for the company to remove fraudulent charges from your account.

• Easier to travel with a credit card. If you travel often for pleasure or business, a credit card can be a nice traveling companion. Cash and debit cards can also work, but it’s always easier with credit cards. You can lose cash, and if you reserve a hotel or car rental with your credit card, the merchant may place a sizable hold on your card, at which time money in your bank account may be unavailable.

• You need to build a credit history. It’s harder to buy a car or house without a credit history. If you’re able to make all purchases in cash, you can probably get by without a credit card. But if you plan on taking out loans, getting a credit card is the first step to establishing credit.

Why you may not need a credit card…..

• You prefer to save for purchases. Maybe you don’t need instant gratification and you’re perfectly happy saving up for major purchases, such as cars and electronics. And maybe you prefer the simplicity and convenience of renting and have no intentions of buying your own home.

• You want what you want, when you want it. Plastic can have a useful place in our lives. But if you have a problem with impulse shopping, or if you can’t deny yourself, it doesn’t have a place in your wallet. For now, you might be better off with a prepaid debit card, where you can only spend what you deposit on the card.