Why Should I Have a Credit Card at All? What if I Never Want to Use One?

Years ago,  banking executives complained loudly about consumers who carried their credit  cards without running up a monthly balance. Then, personal lending flipped  itself upside down. Today, many credit card product managers believe they’ll  make as much money from transaction charges as they will from late fees and  interest payments. That’s changed the dynamic for rewards credit cards and cash back credit cards,  designed to entice consumers to float their purchases for 20 or 30 days.

Here’s why I think you should carry at least one rewards credit card:

  • Purchase protection. Cash, checks, and most debit cards  won’t help you get your money back when your flight gets cancelled or your new  gadget busts. Federal laws and bank policies favor credit card holders in most  disputes. Even during a charge-back investigation, it’s the bank’s money on the  line, not yours.
  • Credit report impact. Contrary to popular belief, credit  scores don’t measure how much debt you’re in. They report how well you manage  your accounts. If you don’t have a credit card to maintain, there’s nothing to  score. That can cause problems when employers and insurance companies use credit  scores to evaluate you for jobs or policies.
  • Rebates and bonuses. Retail industry lobbyists complain  about high transaction rates, but there’s no indication that making purchasing  platforms cheaper will trickle down to the consumer. Cash back credit cards  offer discounts of up to 6 percent on purchases you make in person. Stack  special rebates of up to 20 percent when you shop from your credit card  company’s website, and you can enjoy some serious savings.

Depending on your lifestyle and your spending habits, you might even consider  a travel rewards card  that offers bonus miles, room upgrades, or free baggage check. Just pretend your  credit card’s a debit card, and set aside the cash you’ll need to pay your  balance each month. That way, you won’t risk running up a pile of debt you can’t  handle.

Joe Taylor Jr.

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