Do you need a credit card?


Note and Coin standing at crossroads that read YES and NO Note and Coin standing at crossroads that read YES and NO

Is a credit card really necessary, or can you get by with just paying cash for everything? Although you can manage your finances without a credit card, having one or two in your wallet is a smart idea. Credit cards can help you get cash in an emergency, finance large purchases, and even protect you from financial frauds. But at the end of the day, the bottomline is this - Do you need a credit card or not? 


To answer this question, let’s first take a look at why credit cards are beneficial. 


Benefits of using credit cards

Credit cards may be used for a lot more than simply making purchases. The benefits of using credit cards include the following:


Boost your credit score

Credit cards are a valuable tool for building credit since they allow you to demonstrate how effectively you handle credit. Most credit card issuers will report your payment activity and account information to credit bureaus. Credit cards are a strong measure of how effectively you manage credit since they allow you to pay off your whole bill each month or just the minimum. Credit cards may help you create a strong credit history if you make all of your payments on time and don't exceed your credit limit.


Sign-up incentives and rewards

Benefits credit cards provide you rewards depending on how much you spend on the card—usually cash back, cash bonuses, miles that can be used to pay for travel, or points that can be used to make purchases. When used carefully, a rewards credit card might assist you in paying for travel or other expenditures. Just be sure the benefits of using credit cards don't lead you to spend more than you can afford or to accumulate a large debt that you can't pay off.


Purchasing power

Credit cards may offer a financial safety net to help you deal with unexpected expenses. For example, if your automobile requires a costly repair and you don't have the funds to pay for it, using a credit card might get you back on the road fast, eliminating the need to borrow money from a friend or leave your car in the shop until you can pay for it. A credit card with a 0% initial annual percentage rate (APR) on purchases might help you finance large items like appliances, furniture, or a trip and pay them off during the promotional APR term without paying interest.


Credit Cards vs. Debit Cards: What's the Difference?

So, now that you know what the benefits of credit cards are, let’s take a look at how they differ from debit cards. 


Both credit and debit cards are plastic cards that may be used to make transactions. There are, however, certain major distinctions between the two that you should be aware of. Revolving credit is a kind of borrowing that includes credit cards. When you initially get a credit card, the issuer sets a limit on how much money you may borrow (your credit line). When you use your credit card, the card issuer pays the retailer and then adds the amount to the balance on your card (the amount you owe). When your monthly bill is due, you have the option of paying the minimum, more than the minimum, or paying the whole debt.


A debit card allows you to make cash transactions without having to carry cash on you. The card is connected to your checking account, so when you use it, money is sent from your bank account to the merchant's account. Payments are made in real time, so as soon as you make a purchase, that amount is deducted from your bank account. Fraudulent debit and credit card usage is also treated differently. If your credit card is lost or stolen and used to make purchases, the charges are added to your balance and you do not lose any money right away.


For a variety of reasons, debit card theft may have a greater financial effect. First, the money leaves your account instantly, which might put you in a tight position if, for example, your checking account is depleted and your rent is due. Second, your defenses against debit card fraud are weaker.


Even if you report the bank within two days of the scam, the bank will need to investigate before reimbursing you. In certain situations, you may have to wait up to two weeks for your money to be returned. Check your bank account online on a frequent basis for any strange or odd purchases to keep an eye out for debit card fraud.


So, is it necessary to have a credit card to build credit?

Although credit cards may assist in the development of credit, they are not required. Here are several options for establishing credit without using credit cards.


  • Make sure you pay your payments on schedule
  • Obtain permission to use someone else's credit card as an authorized user
  • Take out a credit-building loan


Wrapping up: Do you need a credit card?

Get a free copy of your credit report and credit score if you're unsure about your credit situation. To help your credit score increase, utilize your credit card for little purchases and pay it off on time each month. Then try utilizing free credit monitoring to keep track of the progress you've made in establishing your credit.


A strong credit score may help you get lower interest rates and better conditions on car loans, personal loans, mortgages, and other types of loans. It may also be simpler to get insurance or rent an apartment with good credit. Clearly, one of the benefits of using a credit card is that it may help you develop credit.


A quick recap

  • There are many benefits of using credit cards, including a boost in your credit score, incentives and rewards and increased purchasing power. 
  • However, credit and debit payment options differ from each other in many ways. 
  • And you can also build your credit score by paying on time, using another person’s card as an authorized user, or availing a loan.
  • So, it is up to you to decide if you need a credit card in your present situation.

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