Recently I did a review on the top 10 credit cards, and was thinking after I wrote that article, do people really need credit cards.  Think about it could you live without a credit card?  If you look at the Dave Ramsey baby step plan they would tell you that you should never own a credit card.

Personally, I have to disagree with that so in this article I’m going to discuss the up sides and the down sides to owning a credit card.

Up Sides To Owning A Credit Card

  1. They help build your credit. As long as you keep the balance down on the card and make your payments on time you’ll end up building a great credit score over time.
  2. They give great rewards. With rewards like frequent flier miles, cash back rewards, to free gas cards it is tough to say no to these benefits.  I personally own a Marathon Gas Card and I think it’s great.  I’m going to buy gas for my vehicles regardless so why not have a card that rewards me with a little extra for doing so.
  3. They work great in a pinch. Sometimes I find myself without enough cash on hand and a credit card works great because I can use it to cover me just that one time.  I’ve had this happen to me a few times.

The Down Side To Owning A Credit Card

  1. They have high interest rates. If you fail to make a payment they can really rack you with the interest, in fact the default interest rate can go as high as 33%.  At that high of a rate it can take a long time to pay even $1000 off.
  2. They have declining balances. If you get stuck paying a balance on your credit card because you didn’t pay it off right away you might find the credit company pulling this little trick on you.  How it works is that every time you pay down your balance your payment gets smaller too.  As a result this will lengthen the time it takes to pay off your credit card balance.
  3. They have uniform default clauses. This means if you miss a payment the credit card company can raise your rate to whatever they want.  That doesn’t just mean on your credit card but any credit card you own, or your mortgage, or even your electric bill.  If it gets reported to the credit bureau they know about it hence they can do what they want.  So play it safe and don’t miss a payment on anything.

It’s Your Choice Now

So are you going to do it?  Would you rather not have a credit card or would you?  I’m not going to answer that but think about this, can you control your credit card habits?  If you can’t maybe a credit card it’s the best thing for you and if you can then a credit card may be for you.