Do You Really Need a Credit Card?

creditPhoto courtesy of Images_of_Money

So many people in America and all around the world think that living on credit cards is a normal and appropriate way to pay for things.  While it has definitely become commonplace, the practice of regularly paying by credit card is a surefire way to find yourself doomed to a long and tortuous climb out of debt hell. Keep on paying just the monthly minimums on your Visa or American Express bill and before you know it, you’ll easily rack up a $20,000+ debt that you can’t handle. Paying for items, gifts, groceries and bills with real money is always the desirable way to go, hands down.  A credit card is not real money; in fact, it’s one of the most expensive loans you could possibly ever take.

However, there are certain instances that will call for you to have access to a credit card, so don’t go cutting them all up in a fury. By all means, feel free to cut most of them up if you’ve got more than one or two accounts, but be sure that you keep at least one card handy, and use it only as we are about to explain.

As a friend of the Veitengruber Law family recently realized, her attempt to live completely debt free, although it was doing fantastic things for her credit score, was putting up roadblocks that she didn’t anticipate. It’s true; using a credit card can be beneficial in the following situations:

  • Taking a vacation – From renting a car to reserving a hotel room and booking spa services, a huge percentage of your vacation amenities must be paid for by credit card.  Usually, you can simply reserve the service with your credit card number and then pay cash by using your debit card when you arrive. In instances where you must put the entire balance on your credit card, do so with great caution and be sure to make payment to your credit card company as soon as your vacation ends to avoid paying huge interest fees.
  • In the event of emergencies – Suppose your home’s entire heating system simply goes kaput in the dead of winter and you just don’t have enough of a buffer in your bank account to pay for the repairs.  You’ve got no choice other than putting it on your credit card, but make large payments every time you get paid until your new heater bill is completely erased from your card history.
  • Dealing with someone you don’t completely trust – Using a credit card creates a history that using cash does not, and if a merchant turns out to be corrupt, credit card companies will take care of the problem for you by reversing the payment and cutting you a break.
  • While travelling – Aside from booking all of the details surrounding your vacation, carrying a credit card as opposed to cash on a trip is advisable as long as you know you can pay for what you spend once you get back home.  The reasons are a combination of possible confusion in unfamiliar countries and with merchants you’ve never dealt with, and the risk of credit card theft or loss.  In all of the hustle and bustle of a vacation, things can easily be dropped, lost, or stolen.  Cash can never be replaced, but a credit card, once stolen, can be reported immediately and no charges will then count against you.

Here at Veitengruber Law, we definitely don’t advocate for the regular use of credit cards, and if you’ve already been there, done that and you need help to get out of debt, we’re here to help.  Using a credit card wisely is ok; just be sure to keep your use extremely limited and within your actual spending budget.

4 Responses to Do You Really Need a Credit Card?

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