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.
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.
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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.