Should You Get a Credit Card?

February 19, 2019
Credit cards are so common that most people do not think twice about getting one. Credit companies are practically giving away credit cards. However, are credit cards free? Take a look at some main reasons to get a credit card, and why you should think twice before getting one.
Should You Get a Credit Card?

To Build Your Credit

A credit card does help build your credit, but it is not the only way. Paying your bills on time also builds your credit over the years. If waiting a few years for better credit is not an option, get a small credit card. Make sure you do not load it to its full capacity, as it affects your credit score negatively. At least make your minimum monthly payment if you cannot pay it in full.

For Emergencies

While a credit card can be helpful in case of an emergency, it is not wise to rely solely on credit to get you out of a jam. Ideally, put money aside in an emergency fund. If you do not have an emergency fund, talk to your bank about getting a loan or line of credit. The interest rate is lower than with a credit card. If your credit score is an issue, a small online loan can help you out. The interest rates are high, but within three months your loan is repaid. With a credit card, there is always the temptation to spend what you have just reimbursed.

To Shop Online

Most websites let you use your debit card, but there are risks tied to using your debit card for online purchases. Creating a PayPal account or using a prepaid credit card is safer.

Should You?

Should you get a credit card? It depends on your spending habits. Do you systematically spend all your paychecks, or do you manage your money responsibly? 

Are there annual fees on the credit card you want to get? Usually, a card that comes with many benefits has a high annual fee. Cards with no yearly fees often have higher interest rates, but if you plan to pay it off before the 21-day interest-free period, it might be advantageous for you.

If you plan to make the minimum payments only, what is the interest rate?

What discounts and rewards do you get with your credit card? Do they cover the annual fees and interest? Keep in mind that while those rewards are profitable when you pay your card in whole every month, the interest rates penalize you when you do not.

It is up to you to decide whether you will get a credit card or not. Weigh the pros and cons against your spending habits. If money is a constant struggle for you, then a credit card will be your greatest foe; but if you manage your finances responsibly, a credit card can be a great ally.