Should I Get a Credit Card?

If you’re over 18, it’s a given you’ve received mailers from credit card companies offering you different cards. When you’re getting so many offers and so much information thrown at you, it can be hard to decide what is right for you. In this article, we’ll help you answer the question: Should I get a credit card?

It’s time to get back to basics: Most people think they know what a credit card is, but let’s review. What is a credit card? A credit card is not free money, or a free pass to buy anything you set your eyes on.  A credit card is a loan, and, guess what, it’s one of the most expensive loans you can get. Did you know with interest rates growing higher every year, a credit card can end up costing you more money in interest than you spend?

Make it about you! Do you find yourself asking, “Should I get a credit card?” The answer depends on your personal financial situation. Credit cards can be great for building credit, which could help you get a loan from the bank, get a better interest rate on loans, making it easier for you to finance big purchases, like a house or car.

Positive Affirmations: Credit cards don’t have to be scary. Credit cards are a great way to gain access to cash in case of an emergency. Did you know you need a credit card or debit card to make a hotel or flight reservation? And even better, certain credit cards come with rewards, like points towards flights, cash back or even savings at certain stores. Check out www.creditcards.com to learn about different cards and their programs.

Go for it: “Clearly, cultivating good credit scores is an essential 21st-century skill.” Says Liz Weston of MSN Money (http://money.msn.com/credit-rating/raise-your-credit-score-to-740-weston.aspx). If you need to build establish good credit for yourself, you’re responsible with your money and can afford to pay off your bill every month then a credit card is right for you.

If this is your first credit card, getting one with a low limit is a good way to go. Start with a card limit of $500 or less. This will help you learn how a card works without allowing yourself to over spend. The best rule of thumb when making a purchase on your card is if you can’t pay off your bill in its entirety at the end of the month, don’t spend the money.

Do not pass go: Credit cards can be very detrimental to your credit score and your personal finances if you aren’t careful. You can accrue debt very easily if you aren’t paying your account down and when you add interest rates to the amount of money you owe, it’s easy to get into debt.

When you ask, “Should I get a credit card,” your answer shouldn’t depend on a purchase you want to make. Don’t sign up for a credit card to finance a purchase you can’t afford. This spells disaster. Many people in this situation end up over their head in debt with no way to get out. It’s very easy for this to happen if you aren’t using the credit card like cash. In fact, 54% of families with credit cards say they owe money to the issuing financial institution. Only spend what you can afford to spend that month.

Before signing up for a credit card, assess your financial situation and ask yourself if you can control your spending. If you make sure to make payments on your card on time every month and for at least the minimum balance, you’ll establish a good credit history. As long as you’re honest and careful with your spending, a credit card is a great thing to have!

If you’re struggling with credit card debt and need help, learn more about how FCS can help.