Should You Get a Credit Card? X Pros, Cons, and Options

Did you know that the United States has a record high of $930 billion in credit card debt? [1] It’s safe to assume that someone – whether you or a friend of a friend – has some massive credit card debt on their profile.

That may lead you to wonder, “Should I get a credit card, knowing how easy it is to fall into debt and add to that trillion-dollar deficit?”

In this article, we’re going to consider the pros and cons of getting a new credit card, or a second credit card, as well as a few other options you may not have considered.

Why You Should Get a Credit Card

Let’s first discuss some reasons why you should get a credit card.

Having An Open Credit Line Improves Your Credit Score

The first advantage is that getting a new credit card does help you build a stronger credit history. The better your credit score, the more favorable rates you can get for financing.

Consumers with no credit whatsoever may face the same problem as someone who has bad debt – a low or inapplicable credit score.

Having a Credit Card for Emergencies Is a Life-Saver

Of course, it’s troublesome when you start thinking that everything in your life is an emergency and you need to charge it on a credit card.

But there are actually some circumstances where a credit card can be a lifesaver. What if you have to book a hotel at the last minute? What if you want to buy an online product? There are many circumstances in which a company will only do business with you if you have a major credit card, such as the Capital One Quicksilver card.

Having a Credit Card Protects You Against Fraud

While a debit card can be used for many of the same features as a credit card, a debit card doesn’t count as an open line of credit. It’s backed by a checking account, so you can only withdraw or pay for items based on the money you put in.

For this same reason, debit card companies do not offer much protection against fraud. It’s better to file a dispute claim with a credit card company.

Having a Credit Card Offers Rewards Perks

Finally, most credit card issuers also offer rewards programs, with perks like cashback, airline miles, cryptocurrency investment, and hotel points.

Why You Should NOT Get a Credit Card

There are a few good reasons NOT to get a credit card. These cons would also apply to getting a second credit card if you already have one.

Feeding the Spending Addiction

While many people claim to charge their credit cards “only in emergencies,” the fact is that most of these charges result from bad financial management – not actual emergencies.

Overspending can become an addiction, and a person can fall into a pattern of using credit as “emergency funds” when it’s actually something they cannot afford. The ending result is incurring debt, damaged credit, and harassing bill collectors.

Unusually High Fees

Late fees, over-limit fees, accruing fees, annual fees – the list goes on and on, and it only adds more debt to the original balance.

Complicated Contracts

Finally, while this is not a problem with every credit card company, it’s important that you read the fine print regarding low-interest rates for a short period of time. Some people glance at a contract and assume that short-term rates are for the entire contract. But if 10% turns into 29% within several months or years, that could come back to haunt you.

Other Options Besides Credit Cards

You might want to avoid getting a new credit card at this time, especially if your income levels are low or unstable. But there are a few other options besides applying for a major credit card.

Choosing a Credit Card With No Minimum Deposit

If you’re willing to sign with a smaller lender, you may be able to find a credit card with no minimum deposit required for bad credit. There’s no real disadvantage here since it works just like a credit card and gives you the same or (or more) advantages.

Take a look at BadCredit’s list of some no-deposit card online lenders.

Get a Debit Card and Find a Merchant Option

Debit cards may not do much for you in terms of credit, but when you connect your debit card to an online merchant, like PayPal, then you could get some of the same benefits associated with a credit card – like fraud protection, cashback on purchases, and other advantages.

Get a Student, Car, or Bank Loan

You don’t have to get a credit card to establish good credit. You can get good credit by taking out and back paying other loans – like student loans, car loans, bank loans, or even paying utility bills in your name.

As long as you make monthly payments on time, you will build positive credit – and possibly avoid higher interest rates associated with credit cards.

Become an Authorized User

If you don’t want to take a plunge into unknown financial territory yet, become an authorized user on someone else’s credit card account and have a trusted family member or friend co-sign with you. This can also build your credit history.

If you’re young and still living with your parents, you might even find special credit contracts made for you. Read our article on how to choose a teen debit card.

Be sure to compare different offers from lenders, both major and online, and talk your options over with a trusted friend who understands finance.

You can build good credit and stay out of debt if you find a fair contract and make timely payments every month – and it will be worth it.

1 https://www.cnbc.com/select/us-credit-card-debt-hits-all-time-high/