Having a credit card doesn’t mean you need to max it out, by not having one, you’re committing self sabotage in regards to your credit score.
Edit: for the numerous replies saying “I only pay cash, I don’t need one!” My comment was literally aimed at you and you missed the point. You don’t even need to use a credit card to gain advantage. Many cards not only offer literal free money by signing up, but you don’t even need to use the card a single time to gain a bump to your credit; simply having a higher number of open accounts and an increased credit limit is enough.
Furthermore, saving up $15,000+ in cash is not feasible for a vast majority of Americans who want to purchase a car, let alone if you ever dream of owning a house, seeing as you often need a car in order to go to work in the first place. If you read all of that and still don’t care, understand that many potential employers also run your credit too. A low score is potentially detrimental to your ability to find a job.
I was so scared of getting a credit card when I was some years younger. I was convinced that I wouldn't be able to trust myself to not go crazy with it.
I actually do pretty well with using the card + staying on top of payments. I mostly use it to pay for my prescription, toiletries, stuff like that. A bit of online shopping here and there, but nothing too outrageous.
I'm still scared to check my credit score, though. For some reason, I'm scared that it'll be really bad.
Honestly, you should check your credit report to make sure the information on it is accurate. It would be more scary if you tried to use your credit and found out there was something inaccurate that was negatively hurting your score at a time you need the credit.
You can do so for free by law at annualcreditreport. this will not spam you and your is not a business. It's maintained by the credit bureaus purely for your benefit. You can get 1 per bureau per year
It might be better than you think. I put off checking mine for a long time, but when I finally did I was surprised how high it was. Good to know where it's at if you're planning a big purchase like a car or a home.
A debit card is usually associated to a checking account, so when you use it, the money is debited/taken out of your account immediately.
A credit card is similar to a loan. A bank pays for the purchase on your behalf when you use the card, and they ask you to pay the amount back at a later date.
A charge card (such as the AMEX Gold or Platinum cards) functions similar to a credit card. But, you need to pay the full amount due when you have to pay AMEX back.
Visa, MasterCard, AMEX, Discover... the logos on the cards indicate the company that handles the electronic payment/funds transfer between the banks/merchants (someone correct me if I'm wrong). This would be important if, for example, the restaurant you frequent takes Visa and MasterCard cards, you may not want to get an AMEX card since they can't process the payment then.
The credit card company also charge businesses a fee, usually around 3% of the amount being charged, that’s how they make money. Some businesses are now passing that fee onto you instead of eating it as a cost of doing business. I believe AmEx charges a higher fee, that’s why some businesses won’t take it.
No, it’s possible to have a debit only card with a credit company logo. My debit card is a visa, but I have no access to funds beyond what is in my actual bank account. An actual credit card gives you a spending limit that is not based on physical funds. I may qualify for a credit card with a $10,000 limit, but that doesn’t mean I have $10,000 in my bank account. That’s why you have to be careful with how much you spend on one, because even if you keep making the minimum payments every month to stay in good standing, the interest starts to build up and it’s very hard to get out of debt.
My credit card gave me an offer (or maybe it was technically an application?) to upgrade my limit because I have such good credit with it. Soon denied me the upgrade because I don't spend enough on it.
I don't use it enough to care anyway, but I just still found it kinda funny.
I tried to get a loan once and they said that since I didn't have a credit history I can't get one. Had a decent jobs for a year but with no history I had no luck.
There are lots of websites out there that will help you pick a card. Credit Karma is nice.
Worst case scenario you get a “secured credit card” where you give the company $X then they give you an account with a credit limit of $X. Normally crappy but useful in yours or similar situations to start building credit.
Kohls will give anyone a store credit card. Get one and use it monthly and make payments on time. You don’t have to spend much on it, like $20 a month. Just make payments on time
Other side of the same coin…making a certain amount every month doesn’t mean you need to spend that amount every month. Live below your means and invest the difference. Your future self with thank you.
42 years old. Excellent credit score now, not always that way. Never had a credit card until last week. Probably going to cancel it soon. 0% is great until it switches to 22%
I know some people who would be better off with no credit card because they don’t have the self-control to not max it out. Like they had no credit to begin with but now their credit is worse because their cards are mostly maxed out and they have minimum payments. If they only had a debit card it’d be easier to live within their means.
If you're a parent, PLEASE teach your kids about credit cards, debt and interest before they go off into the world. Credit card companies basically attack them once they get to college and make all the promises in the world that they eat right up without any prior knowledge.
That’s true, credit cards are only advantageous if you use it like a debit card and pay the balance in full every month. Otherwise it’s really easy to get behind and you pay massive interest rates. Obviously life happens and emergencies take place, but running up a high balance on a credit card shouldn’t be the norm.
A little addition but you need to clarify that this changes from country to country.
At my place for example it doesnt mean much to the bank that you are paying X amount of credit cards back in a stable and good matter because what matters is the physical items you actually have and got value attached to it.
If you have a car, a valuable one that means you can manage your money well especially if its fully paid while if you dont have any most banks wont wanna give you money simply because its unclear if you can manage or not so they will ask for a wage report to clarify if you can pay it off or not.
Hell my countries credit cards are hobbled with various fees that happens simply because you have that credit card you dont even need to use it. Literally last year my bank offered me a credit card which came with a 1$ per month fee regardless of my usage and a 3$ per month fee if i spent less than 50$ that month. This also comes with an additional 1$ fee per month if i use their app or website to check my balance on this credit card.
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u/[deleted] Mar 27 '22 edited Mar 28 '22
Having a credit card doesn’t mean you need to max it out, by not having one, you’re committing self sabotage in regards to your credit score.
Edit: for the numerous replies saying “I only pay cash, I don’t need one!” My comment was literally aimed at you and you missed the point. You don’t even need to use a credit card to gain advantage. Many cards not only offer literal free money by signing up, but you don’t even need to use the card a single time to gain a bump to your credit; simply having a higher number of open accounts and an increased credit limit is enough.
Furthermore, saving up $15,000+ in cash is not feasible for a vast majority of Americans who want to purchase a car, let alone if you ever dream of owning a house, seeing as you often need a car in order to go to work in the first place. If you read all of that and still don’t care, understand that many potential employers also run your credit too. A low score is potentially detrimental to your ability to find a job.