Why should you should and shouldn't have a credit card?

Question

Just wondering, i'm writing a report on Credit Cards.

Answer 1

I suggest you read The Total Money Makeover by Ramsey. I have read all 3 of your questions and Dave Ramsey's book would be a great resource for your report and (in my opinion) you life!

Credit Cards shouldn't be used for emergencies, cash should be. You don't need to establish your credit because you can use cash and something like a house the lender can use a process called "manual underwriting" instead of basing your loan rate on your FICO score. I rented a car last month with cash. I had to put a $50 deposit down but when I returned the car I recieved my $50 back and that was from Enterprise. You can also use cash for a hotel room (or your debt card), etc.

You can use cash for every day purchases. Plus cash has better bargaining power (show some $100 bills to a car dealer or furniture sales person and they will wheel and deal with you). If you are afraid of carrying cash, use your Visa or MasterCard debit card. Also one is no more likely to be robbed of their money than people that carry plastic, unless of course you are showing off the cash you are carrying!

Read Dave Ramsey for another perspective.

Answer 2

A credit card can be useful to build your credit score and help you in a true emergency - but you MUST exercise discipline.
1) Always keep your balance to $0. If you can't pay something off completely before the balance is due don't buy it. Monitor your balance weekly using an online service. This is the only way to use a credit card to improve your credit score - namely, keep your balance at $0 and NEVER be late for a payment.
2) Choose a large reputable company such as Chase for Visa or American Express. You need to have quick 24x7 access to customer support and online capabilities.
3) Use if for emergencies only - for example travelling in a foreign country or emergency car repairs. Do not use the card casually (i.e. shopping or recreation) because it's too easy to over-spend.
4) Don't go for frills - go for cheap. Forget about airline mileage cards or gas cards. Find a card with the lowest interest rate and $0 annual fee. Keep your card generic - don't pay for a pretty piece of plastic.
5) Minimize your use of the card online or over the phone. Do not overly expose yourself to freud. Write down your account number and customer support phone number in a secure place - so that if your card is lost/stolen you can easily and immediately report it.

Answer 3

A credit card is a great way of carrying money securely, as long as you pay off the full balance whenever you use it. Having been through bankruptcy, I've seen this from both sides and would actually advocate that no-one has a credit card, as it's now far too easy to get deep into debt.

On the other hand, debit cards are great as they are accepted at most of the same places as credit cards, but only let you spend the money you already have.

Does that help?

Answer 4

You should have a credit card for emergencies and for convenience purposes like buying items on the net, renting a car, making travel reservations, etc. The balance should be paid in full each month.

You should not have a credit card for spontaneous, irresponsible buying of items that you otherwise would not be able to afford. Many people think that credit cards give them "freedom". Unfortunately this is the short-term view. In the long-term what they really get is a pair of shackles that severly limit them in what they can do.

Answer 5

Credit cards are good for emergencies. And also to rent a car with. You shouldn't get a credit card just to use on everyday purchases unless you can pay the balance when the statement comes.

Answer 6

Unless you just want to be in debt with credit cards their is really no need to have one...if you need plastic for internet use just get a prepaid visa card from greendot or western union

Answer 7

if you carry cash, you are out of luck if it's lost or stolen. if your credit card is lost or stolen, it's not a big deal, the bank will take care of it.