Do I Need a Credit Card?

I love to respond to reader emails and questions that I get. I want to help as many 20-somethings as possible with all of this personal finance stuff. A frequently asked question that I receive through email and in person is: “Do I need a credit card?”

My answer to this is NO you don’t need a credit card. You don’t need anything that you don’t want. You have to want a credit card. You don’t particularly need a credit card.

I’ve been told that I need to build my credit score. Does this mean that I need a credit card?

I want access to an emergency fund. Should I get a credit card?

I have no credit history. Should I sign up for a credit card?

I found a low-interest credit card. Should I take advantage of this?

The answer to all of these is no. A credit card is not for the clueless. If you don’t know what a credit card is all about then you shouldn’t sign up for one for some arbitrary reason either. You do need to build your credit score. You don’t need to screw yourself over because you put more stuff on your credit card than you could possibly ever afford to pay off.

I personally believe in the idea of a credit card and I hate it when people blame credit card companies for being in debt. The best way to get out of credit card debt is to stay out of credit card debt. This might mean that you don’t sign up for a credit card right now. That’s cool. You don’t NEED a credit card.

There are two common scenarios when it comes to obtaining a credit card in your 20s:

  1. A credit card can be an excellent tool for very few.
  2. A credit card can put many into debt.

Under which category will you fall under? I personally plan on doing everything that I can to ensure that you end up under scenario #1. I want to see you either use your credit card wisely or not even get one if you’re not ready yet. I don’t want to see you get into credit card debt because most of us have enough debt as it is from college.  If you happen to be in debt right now I want to see you get out of it. I want to help you devise a plan that you can execute painlessly. I want to see you make the right moves towards killing this debt off.

You don’t need a credit card if you’re not ready to use one just yet. You can get a credit card if you understand the benefits and have control over your spending. You can have that new flatscreen TV in your room. You just need to have the cash for it in your savings account ready to transfer over if you happen to make this purchase with your credit card.

If you have the credit an excellent credit card requires, you may want to consider applying for one of the best credit cards of 2012.  Saving money with an up-front bonus is a great idea, but only if you know what you’re doing.

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