Is a Credit Card Right for Everyone?

Americans no longer rely on credit cards the way they used to. Ever since the GFC, attach rates have gone down and most people report to carrying less credit now than they did back in the early 2000s. They also tend to pay off their full balance and pay on time more often than they did back then.

This is according to a survey conducted by Gallop Poll that included 1,000 adults over 18. It may be indicative of a positive trend in private finances, which is great considering all the negative economic news we seem to be getting. If people are using credit less often, that can only be a positive thing, right?

There is good and bad to it, actually. It’s always good to be free from debt, but if you have no credit card at all, that can carry some disadvantages. This information may make you ask if everyone needs a credit card or not.

Those without a credit card are going to be inconvenienced at least a few times in their life. This is especially true if they need to travel. That’s because hotels and car rental companies often require a credit card, not just for the reservation but also to cover additional costs in case you damage their property. If you don’t have a credit card, then you may not be able to get the reservation you are hoping for. Or you may have to go through some additional steps that are a hassle for you.

You can always just use a debit card, in most cases, but that can result in a sizable portion of your money being put on hold. If you have a lot of money, that won’t really be a problem, but if your budget is a tight one, then you could run into some trouble.

Credit History
It’s smart to be wary of credit cards and how they can increase your debt quickly, but if you avoid cards altogether, then it is going to negatively affect your credit history. Credit cards are one of the key ways to build up a credit history, and if you never use them, then you may not have a history at all. That can make you look risky to lenders, and they may not give you that car or house loan if you don’t have a credit history to show that you are financially responsible. If you have no credit history, that can be as detrimental to you as having a negative one. You need to have at least some credit history that lenders can refer to.

The Advantages of Credit Cards
Owning a credit card is about more than just bypassing everyday hassle, and building up your credit history. You can enjoy some real perks when you own a credit card. Many cards come with fraud protection, which ensures that any losses incurred by having your card stolen will be covered by the card issuer. The FTC (Federal Trade Commission) says that once you report your card stolen, you only have to pay a maximum of $50 for any charges incurred. Even if that sounds like a lot of money, it’s far less than you could be paying if someone were to steal your debit card and empty your bank account. The FTC says that if you report your card stolen two days or later after it has been stolen, you could lose up to $500. If you report the card stolen 60 days after it occurred, then your bank doesn’t have to cover you for anything.

Your credit card can also give you discounts, rewards, cash back, travel protection and more, if it’s a decent card. Think of all the advantages you are missing out on by not having a credit card.

What’s been listed here is only a portion of the benefits you get from having a credit card. Just because you have a card, that doesn’t mean you will accrue lots of debt. If you use the card wisely and make responsible decisions, it can be a very useful tool that makes your life much easier.

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