John S Kiernan, Managing Editor
@John
We believe most people should have a credit card. It’s simply the easiest way to add positive information to your major credit reports on an ongoing basis. That, in turn, will help you build credit history and improve your credit standing. And credit improvement can save you a ton of money on loans and lines of credit as well as open doors to opportunities such as a new job or apartment.
Actually using your credit card to make purchases is another story, though. Whether that’s a good idea depends on if doing so will cause you to spend more than you would otherwise.
If it won’t lead to bad habits, you’ll be able to take advantage of a credit card’s many other benefits. They range from the ability to earn rewards on everyday spending or pay for big-ticket purchases over time to assorted travel perks and the convenience of shopping online.
And if a credit card would lead to overspending, you can still benefit from its credit-building capabilities. As long as you make sure to pay any fees that are assessed, you can simply lock your card in a drawer and watch positive information flow into your credit report on a monthly basis. After all, your credit utilization will be zero and you’ll be classified as having paid on time.
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A credit card is needed as a revolving account, one of the required accounts types besides installment account to round up your credit profile. Lenders would like to see a consistent payment history in all your types of accounts in order to offer you better terms for mortgages, student, car or personal loans. Therefore, a credit card is needed to have a credit profile and credit score. Ultimately, a credit profile is often needed for jobs application, for cars or renters insurance, for rental/leasing application, for loans to fulfill a life's project and expenses (education with student loans, house/property with a mortgage, car purchase, even for utility application such as electricity, phone, internet etc). In short, a credit is needed in diverse situations when there is limited cash or in case of emergency as the saying goes: "Cash is King, Credit is Queen!