Today I am covering the topics of credit cards. Are they are good or bad financial decision?
Last summer, I was on the trip of a lifetime with my younger sister. We had flown to Arizona and were about to check out at the rental car counter when I pulled out 
my debit card. The lady at the counter explained to me that I needed to go through all of these extra steps to rent the car, just because I was paying with a debit card instead of a credit card. It took forever, and I was just generally not in a great mood after having to go through all of these extra steps. All of the hassle could have been avoided if I simply had a credit card with a high enough limit to make the large purchase of a rental car for a whole month. (Huge expense but also totally worth it!) It was then and there that I decided I needed to get a credit card.
I quickly realized that I wasn’t sure if a credit card was a good choice for me or not. I do not like making big decisions like this without at least knowing some of the basics. So I needed to delve into some research on the topic and have distilled the information for you below. I think that the decision to get a credit card should be taken seriously because if used incorrectly, it could land you in quite a bit of trouble. There are good reasons to get one, but there are also many reasons why you should not get a credit card.
The Good:
1. The purchasing power of a credit card is virtually unmatched. You can buy things virtually anywhere in the world because most major credit cards are literally accepted everywhere. Plus, your credit limit might be more cash than you have on hand so you can buy things that you might otherwise have to pass up.
2. Rewards. There are some great credit card reward programs out there. If you are considering getting a credit card you should look through your options closely. For example, I love to travel so I decided on the Chase Sapphire Preferred Card because I love to travel and it offers a good rewards system for flexible traveling. However, don’t spend more than you normally would because
3. Credit. It makes sense that a credit card would help with your credit score, right? And it does so long as you use your credit card responsibly. It helps by showing future lenders your credit history and the fact that you do (hopefully) pay down your balances. A good credit score can be extremely important when you want to make big purchases such as a home or car.
4. Good to have in case of emergency. What happens if you lose your job, your car needs a huge repair, you or a family member needs immediate and expensive medical attention or you need to pay for another hefty and unexpected expense? If you have a credit card on hand, you can use that to get you through while you worry about more important things, like the health of your family. Not to say that your finances aren’t important, but hopefully, we all realize that some things are just infinitely more important.
5. Fraud. No one likes that word and no one likes to deal with the aftermath of fraud. Credit cards have more anti-fraud protections in place than debit cards. The peace of mine alone is almost worth the switch to a credit card.
The Bad:
Now credit cards can’t all be sunshine and unicorns. Important newsflash: they are not. As a cautionary tale, the average U.S. household has $15,310 in credit card debt alone (according to a 2016 Gallup report). Please don’t join that scary statistic. There are some serious reasons why you shouldn’t get one, as discussed below:
1. Available spending. This does not apply to all of us, but some people cannot help but spend to their absolute maximum even if they cannot actually afford it. The unpaid balance rolls over and it can really snowball out of control. If you don’t think you can create a budget and stick to it, regardless of how much credit you have available, then I wouldn’t get a credit card.
2. Debt. If you have multiple credit cards and use all of them but can’t afford to pay it off at the end of the month, then you will accumulate debt. This is not good for your credit score or overall financial health.
3. Fees. Late fees can add up quickly if you miss a due date. Also, some credit cards require an annual fee, which may be worth it but may not be depending on your situation and why you have the card in the first place.
4. Interest. If you let your balances roll over each month, your building balance may also be subject to interest rates that could cripple your financial situation. The best way to avoid this is by applying for a 0% APR card or by simply paying off your purchases each month.
Now that you know a little bit more about credit cards, hopefully, you feel prepared to make a personal decision about whether applying for a credit card is the right choice for you. Most American have 2 or 3, but starting with one is probably best. If you do decide to get one I recommend starting with just one.
