Credit cards are one of the most widely accepted ways to pay around the world. However, just because something is widely accepted, doesn’t necessarily mean it’s something that you should have. For instance, cigarettes were widely accepted years ago, and it’s definitely not nor was it necessary to smoke. So today, we’re going to look at the fundamentals behind credit cards to figure out if they’re just accepted or if they’re actually important to have at one point or another.
Understanding How Credit Card Debt Works
With most loans, secured and unsecured, an amount of money is given as a loan and later paid off. After that, the loan is done. However, with credit cards, and a few other types of loans, that’s not how it works. With credit cards, you have what’s called a revolving debt. You’re given a specific spending limit and you can continue to pay your card off, add debt, pay off, add debt, until the end of time. You already knew that, but it’s important to keep that information fresh for the points I’ll be making here soon.
I Believe That It Is Important To Have A Credit Card, Here Are My Reasons
Reason #1: For Credit Purposes – Revolving debts are very important to your credit. You don’t necessarily have to have tons of debt, but showing that you’re financially capable of taking out small loans and paying them back as agreed on a regular basis goes a long way. That’s why if you do research on the best ways to fix bad credit or establish credit, chances are, you’ll come across secured credit cards.
Reason #2: You Pay For Them Anyway – In order to provide exceptional rewards, lenders have to get the cash from somewhere, and I’ll tell you they’re not buying you a plane ticket out of their profits. When you swipe your card, the business that you paid for a product or service offers a percentage of that money to a merchant account provider. As rewards and other credit card perks have become more prominent, these fees got higher and higher. To avoid having to pay those fees as a corporation, prices on everything are now just a little higher than they would be without credit cards. So, if you don’t have a rewards card, you’re paying for something that you never get to use.
Reason #3: We All Love To Travel – If you’ve tried to travel without a credit card, I’m willing to bet that you ran into a few hurdles. If you want to rent a car, reserve a hotel room, transfer some items, or plan any form of vacation, chances are, you’re going to need a credit card. If you love to travel, having one of these little pieces of plastic will come in handy every time you leave town as you can access credit card services almost anytime, anywhere.
Who Shouldn’t Have A Credit Card
Although for most people, it’s probably a good idea to have one of these in your wallet. However, as with anything else in life, they’re not for everyone. That being said, if you have any of the following bad habits, you shouldn’t get a credit card until you clear them up.
- Poor Spending Habits – If when you put $100 in your pocket, it all of a sudden catches on fire and burns your leg until you spend it, credit cards are not good for you. The reality is, it’s easy to overspend using them, and if you’re already in the habit of overspending, it’s probably best you stay away from them entirely.
- Poor Bill Pay Habits – Credit cards impact your credit score. Using them in the wrong way could really cause some damage to your credit report. Not to mention, late payments lead to higher “default” interest rates. If you’re not the type of person that makes it a point to pay your bills on time, every time, credit cards may not be for you. Always remember that your credit card can really affect your credit history if you can’t pay your balance on time.
Although credit cards aren’t for everyone, they’re definitely an important personal luxury for many. It gives some people the security that they need in case they ever get into an emergency. For most people, the benefits of having a credit card far outweighs the cons. If you’re thinking about sending an application to get one, chances are, you’re making a pretty good decision. However, before getting one, do not forget to read the terms and conditions so that you know what you’re getting into. Just remember that it’s important to learn how to use your card properly and your financial life should be fine.
Do you think it’s important to have a credit card? What are your views and why?