You should get a credit card account if you’re at least 18 years old and earn more than you spend each month. Ideally, you should get a credit card as an authorized user on a parent’s account even earlier. Simply having your name on a credit card account is a great way to improve your credit standing, even if you don’t get a physical card or wind up locking yours in a drawer.
While everyone should get a credit card for credit-building purposes, you should only use your credit card if you’re prepared to do so responsibly. Late payments can hurt your credit score, for one thing. And failing to pay your bill in full every month can be quite costly, thanks to high interest rates. You could even rack up more debt than you can afford to repay.
Still, the reasons why you should get a credit card outweigh the reasons why you shouldn’t, especially since most major pitfalls are avoidable if you’re careful.
Here’s why you should get a credit card:
Building credit: Opening a credit card account is the easiest way to build credit. The issuer will report the status of your account to the credit bureaus each month. If you pay on time, or simply carry a $0 balance, this monthly reporting will improve your credit score.
Buy now, pay later: With other payment methods, you need to actually shell out your own money at the point of sale. With credit cards, you have until the end of the billing cycle to pay off your purchases with no interest. And you can carry a balance for longer, if you’d like (at a cost), as you’re only required to pay a specified minimum amount each month.
Introductory interest rates: Many credit cards can help you manage big purchases by offering a 0% interest rate for a certain number of months. Or, if you already have debt, you may be able to save with a 0% balance transfer credit card.
Rewards: You won’t earn rewards by paying with cash. Very few debit cards offer rewards these days, either. But there are hundreds of credit cards that’ll give you cash back, points, or miles for every dollar that you spend. You may also get bonus rewards for spending a certain amount in the first few months or every 12 months.
Fraud protection: If someone steals your wallet and spends your cash, you may never get it back. But if someone steals your credit card and uses it, you won’t be held liable for the fraudulent purchases. All major credit card companies have $0 fraud liability policies.
Supplemental benefits: Paying with a credit card often gets you perks such as travel insurance, purchase protection, price protection and extended warranties.
If you’re at least 18 years old, the minimum age to have your own credit card account, you should definitely consider getting one. But keep in mind that maxing out your card, forgetting to make a payment or letting too much interest build up can have long-lasting consequences for your finances. But once you learn how to use your card responsibly and build your credit score, you’ll see tons of benefits from being a cardholder.
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