Credit Cards: Good or Bad?
I have heard many a people say that they don’t need - or even want - credit cards. Many proclaim they are bad, and many say that they’re good. Both sides of the argument have valid points in some instances, but not all points made in the argument apply to everybody. Here’s my stance on the subject…
What the ‘credit cards are bad’ people tend to say is that credit cards lead to financial problems. People will use cards, max them out on buying luxury goods and either fail to make timely payments, or get buried under mounds of interest fees and eventually, it leads to a financial breakdown. Many people I know live this type of lifestyle, charging what they really should not be spending money on. Some people do it to impress others, some people do it because it makes them feel better (until the bills roll in), others do it because they don’t realize they don’t have the money. I agree with this points. Maxing out credit cards is never a good idea, especially if you can’t afford to pay it off.
Unfortunately, many people who say that credit cards are bad also refuse to take the time to properly educate themselves on how credit works and what it means. Some of my friends max out their credit cards and don’t realize the repercussions; paying interest, for example. Sometimes they have the money to pay off their card in full, but don’t because they don’t realize they are paying interest. Proper education on credit card usage is vital - without being aware of how credit cards work, and how to responsibly manage them, it’s very likely that people will find themselves in problems.
What the ‘credit cards are good’ people tend to say is that credit cards offer flexibility and convenience. Being able to pay with a credit card is a convenience for most people; being able to pay at the pump, purchasing items online, utilizing 0% APR offers for larger purchases or balance transfers. Utilizing credit cards allows people the flexibility to pay over time, and a lot of smart credit card users will only do this if it’s on a 0% APR offer and they have a specific reason to not pay off their card in full. I also agree with this point. Credit cards are incredibly useful and convenient.
In addition, credit cards tend to be more secure than carrying around cash. A simple call to a credit card company if one has been lost or stolen will put a freeze on the card, or cancel it completely, and a new card can be issued. Many issuers don’t even hold you responsible for the charges made. If you lose cash, there isn’t anybody to go to for the most part.
All the above being said, I think that credit education is the single most important factor when deciding if a credit card is a good idea for you. Read about credit cards, how to use them responsibly, and start out small. Don’t go on a spending spree, and pay off your card in full every month to avoid paying interest. As with many things, moderation is the key. I don’t buy something on credit unless I can afford to pay cash for it. I use credit very frequently because it is convenient, I can pay my cards off a few weeks after the purchase and thus earn some interest on my money, and it helps build my credit history in a positive way. Building up my credit history is important if I want to apply for a home or car loan. Take the time to get educated before you decide to use credit cards, and make sure you are aware of your spending - then your credit cards will help you instead of hurt you.