Credit Cards

Do You Really Need a Credit Card?

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Many people consider it a necessity to apply for credit cards but in reality, these cards can end up costing you a great deal in transaction costs, annual fees and interest charges. However, there are many cases where a credit card comes in handy. When you are looking for the right card, it would be wise to compare credit cards.

Useful Credit Cards

Despite high interest charges for revolving balances, a credit card can be a very useful item to have, provided it is used correctly. These cards are particularly helpful in the case of an emergency purchase, or if you are faced with an unforeseen high account. The best way to use a credit card, is to pay the balance off in full each month. Only charge what you can afford to pay off each month.

Credit cards are also really valuable should your vehicle suddenly break down. Having a credit card can be most useful in an emergency situation when dining out, particularly with friends, when you have budgeted for less than the final amount on the bill.

Credit cards can also be used for over the phone or online purchases and it is for these reasons that many people apply for credit cards. The ability to purchase an item via an internet auction, or from an online store that is offering sizable discounts, is very appealing to many consumers.

You can purchase an item from out of state and have it delivered to your doorstep with a credit card and a person is able to make internet and phone bill payments by using a card. This is a very convenient approach to paying your accounts and negates the need to wait in line.

Credit card issuers typically offer purchase insurance or even an extended warranty when a person uses their credit card to make a purchase. Both are very valuable, as they offer the opportunity to recoup the purchase price of an item if it is damaged, lost or stolen. These offers also allow you to benefit from purchase insurance when buying online or from a remote destination.

Pay Attention to Your Credit Card Usage

Although there are many positive reasons to apply for a credit card, having this option requires you to be constantly vigilant to make sure you remain debt free.

You can pay an annual fee of anywhere from $50 to $400 on your card and this amount does not include usage fees. Once a person becomes an exception to the credit card rules, by exceeding their card limit or by not paying their monthly bills when they are due, an exception fee will have to be paid.

Credit cards may offer low interest introductory periods from time to time, but if the balance owing is not paid back to zero by the end of the promotional period, the low interest is forfeited. In these circumstances, the cardholder will be paying interest charges that can be as high as 20 percent.

Possible Credit Card Alternatives

It makes good financial sense to open an online savings account, which can serve as an emergency fund. By making an automatic payment from your salary each week, this payment will quickly add up and can be used for the emergencies that people use a credit card for.

Obtain a debit card, which will also allow you to make purchases via your phone or online. The important difference is that this type of card accesses your own funds and you don’t accrue a balance on which you need to pay interest. A debit card issued by either MasterCard or Visa will also offer purchase interest and secure purchases.

Do you think you can make it without a credit card?

Are you ready to build credit wisely? Click here to see the card I recommend as the best credit card for young adults. The card allows you to get your credit score free each month.

LaTisha Styles is a motivational speaker, millennial money expert, and spokesperson specializing in simple finance for millennials. LaTisha is the producer and host of Young Finances TV, a weekly series featuring funny, insightful videos on the basics of personal finance. LaTisha has been quoted in Forbes and Mainstreet, featured in The Economist, and mentioned in US News as a top personal finance expert to follow on Twitter. You can follow LaTisha on Twitter for daily millennial money tips to budget, invest and achieve success!

  • krantcents

    I use a credit card as a convenient method of payment. I pay my entire balance every month. My credit card also accumulate frequent flier miles which I use for overseas trips.

  • This Aggie Saves

    Nope, I couldn’t make it without a credit card. It’s a habit of using now, I like the rewards, and it makes tracking purchases so much easier. Plus you have the protection in case something should go wrong with the purchase.

  • Kurt @ Money Counselor

    I think this is great advice, particularly for this site’s target audience: young adults. I think some people are able to handle credit cards well–paying off the balance each month, avoiding using it to spend beyond one’s means–and some people are not. Until a young person has a credit card for a while and understands how to handle the temptations and responsibilities, best to be very conservative in its use.

  • Anthony Thompson

    In this day and age credit cards have become a necessary evil for some and a serious Achille’s Heel (or Achille’s Hell) for others. However, no one can do without a credit card. Almost all online transactions are permitted with credit cards. It’s the same with phone transactions. We don’t live in a cash-purchase society anymore. It’s now about the plastic. However, debit cards are a better option for those who can’t get approved for credit cards, or for those who just don’t want them.

  • Julie @ Freedom 48

    I think credit cards are a necessity – but we have to be smart with them!

    Having a credit card (that’s paid off) helps build good credit scores, allows you to book hotel rooms, rent cars, purchase things online etc. etc. I can’t imagine not having one.

  • Daisy @ Add Vodka

    I love my credit card, but it works for me because I pay it off every month but still get rebate points from it. So what’s not to love? But yes, it’s so important to use them responsibly!

  • Little House

    For years I didn’t own a credit card due to shoddy credit. But, now that I’ve had a clean record for years and used my credit cards wisely, I just started using my credit cards for every day purchases for one reason alone: security!

    I don’t know what it is, but I’ve had my bank account hacked through using my debit card numerous times and I just got sick and tired of worrying that someone was going to wipe me out. So, now I use my credit card for every day purchases and pay it back on a weekly basis. So far, it’s worked out well and it even tracks where I spend most of my money. But, the key is to pay it back every week so it doesn’t get out of control!

  • Jeff @ Sustainable Life Blog

    I went without a credit card for a while, but started using them again after I got a handle on my spending. I like the flexibility they provide and the protections, as well as the mileage bonuses

  • Jai Catalano

    I thought of getting rid of my cc many a times but I never pay a finance charge because I always pay it off. Hence it’s not a problem… However I do realize I sometimes spend what I don’t need.

  • femmefrugality

    I got by without credit cards for ages. I don’t think they’re a necessity, but they certainly are handy! Especially, like you said, in emergencies. It’s good to have them for the rewards, too. But only if you pay them off quickly and in full. No use getting into consumer debt.

  • Your Daily Finance

    I dont mind having 1-2 credit cards but I make sure one is for emergencies only and the other is just to keep track of bills I pay monthly anyways. I never leave a balance on them and I think having them helps. Especially building your credit.