Do I Really Need a Credit Card? - Tilted Forum Project Discussion Community

darkangel · 01-01-2006, 11:30 PM

I'm 20 years old, I live at home, and I've never had a credit card, and I really don't want one. Everything I buy comes from cash/debit. I bought my car privately, paid through my *cough* one year of college with cash etc. Do I really NEED a credit card? I've seen first hand what debt does to people and I really don't want to get into all of that. I'm 99.9% sure that whoever I marry will most likely have some sort of debt, so I could be tangled up anyway.. but what do you guys think? I obviously don't have that much life experience yet.

Xazy · 01-02-2006, 05:11 AM

You need a credit card so you have a credit history; my recommendation is to just pay it off every month. It may not be important at 20, but it will be later on, if you want to finance a car, get a mortgage etc…

NoSoup · 01-02-2006, 09:22 AM

Quote:

Why Credit is Important

It seems that the old days of paying for everything with cash are gone. Doing so these days will actually cost you additional money - potentially thousands of dollars. Your credit - like it or not - plays a huge role in many things that you do. It affects your insurance rates, is utilized by many apartment complexes to approve tenants, obtain credit cards, vehicle loans, and mortgages. Recently, quite a few employers have recently started screening for potential employees by examining their credit. The fact is, it is hugely advantageous to have a high credit rating, and likely will make life much easier on you - not to mention much less expensive in the long run.

The difference between good and bad credit on large purchases is tremendous. A person with a poor credit rating will generally pay tens of thousands of dollars more in interest than someone with average credit, and a person with excellent credit will pay even less.

Just figured I'd toss this out, and let you decide

For more information, Here is a thread all about credit

snowy · 01-03-2006, 11:33 AM

Quote:

Originally Posted by Xazy

You need a credit card so you have a credit history; my recommendation is to just pay it off every month. It may not be important at 20, but it will be later on, if you want to finance a car, get a mortgage etc…

Yes, but you can build credit without using a credit card. I built credit by paying my bills (utilities) on time. So no, you don't need a credit card. I've never had one and I never will.

Rodney · 01-04-2006, 05:30 PM

Quote:

Originally Posted by onesnowyowl

Yes, but you can build credit without using a credit card. I built credit by paying my bills (utilities) on time. So no, you don't need a credit card. I've never had one and I never will.

I've said this before and I'll say it again: I bought a house without any help from the credit bureaus. I had never had a credit card, nor bought anything on a time payment,; on the other hand, I had never been late with utility or medical bills. The credit bureaus didn't have me on their radar at all.

What I did have was:

* The downpayment, and significant additional savings.
* A good job.
* A couple of landlords who vouched for me as a tenant who paid on time.

The mortgage company was a little surprised when the credit bureaus told them they had nothing on me; but I explained that I had no credit history because I always paid cash. And they accepted that. They simply asked me to state as much in a letter, which I did. I suppose they wanted some legal assurance that I wasn't a super con man who'd whipped myself up a new identity.

In short: you do not need a credit history to make major purchases. All credit cards do is allow you to buy things that you don't have the money to buy. And this is unwise.

I do keep debit cards for convenience, but they draw directly from my accounts.

NoSoup · 01-04-2006, 06:25 PM

Quote:

Originally Posted by Rodney

I've said this before and I'll say it again: I bought a house without any help from the credit bureaus. I had never had a credit card, nor bought anything on a time payment,; on the other hand, I had never been late with utility or medical bills. The credit bureaus didn't have me on their radar at all.

What I did have was:

* The downpayment, and significant additional savings.
* A good job.
* A couple of landlords who vouched for me as a tenant who paid on time.

The mortgage company was a little surprised when the credit bureaus told them they had nothing on me; but I explained that I had no credit history because I always paid cash. And they accepted that. They simply asked me to state as much in a letter, which I did. I suppose they wanted some legal assurance that I wasn't a super con man who'd whipped myself up a new identity.

In short: you do not need a credit history to make major purchases. All credit cards do is allow you to buy things that you don't have the money to buy. And this is unwise.

I do keep debit cards for convenience, but they draw directly from my accounts.

Although this may be true, I can tell you from my professional experience that very, very seldom will you obtain the best mortgage financing out there without a high credit score. There certainly are programs out there for people without any credit history reporting to the bureaus, however - nearly every one that I am aware of will have an increase in the rate to represent the additional risk the lenders are willing to take on without a credit score.

Additionally, in order no obtain financing without credit history, you typically have to be in a very, very good position financially speaking - a very large downpayment and significant liquid cash is almost always required....

Just figured I'd throw that out

Also, depending on the utility company that services your area, some do not report to credit reporting agencies.

Don't get me wrong, it certainly is possible to obtain a mortgage without a credit score, but it is much, much easier with a high credit score, and it is very likely you will get better rates and terms

Xazy · 01-05-2006, 12:07 AM

Quote:

Originally Posted by NoSoup

Although this may be true, I can tell you from my professional experience that very, very seldom will you obtain the best mortgage financing out there without a high credit score. There certainly are programs out there for people without any credit history reporting to the bureaus, however - nearly every one that I am aware of will have an increase in the rate to represent the additional risk the lenders are willing to take on without a credit score.

Additionally, in order no obtain financing without credit history, you typically have to be in a very, very good position financially speaking - a very large downpayment and significant liquid cash is almost always required....

Just figured I'd throw that out

Also, depending on the utility company that services your area, some do not report to credit reporting agencies.

Don't get me wrong, it certainly is possible to obtain a mortgage without a credit score, but it is much, much easier with a high credit score, and it is very likely you will get better rates and terms

Exactly, and if you will always pay it off why not get the free points / miles / cash back. But yes, I have dealt with people buying a place with no credit but they pay more, it takes much longer (since they have to build your credit from all these other places). On a side point there are some hotels, places you travel, car rentals etc.. that require a credit card for security.

Rodney · 01-05-2006, 05:26 PM

Quote:

Originally Posted by NoSoup

Additionally, in order no obtain financing without credit history, you typically have to be in a very, very good position financially speaking - a very large downpayment and significant liquid cash is almost always required....

Just out of curiousity: by today's standards, does the old standard 20 percent down count as a "very large" downpayment? Because if it does, mortgage lending has gone to hell...

Kadath · 01-06-2006, 09:38 AM

All right. I will say that I didn't have a credit card for a long time, and things got harder and harder for me. Rental car companies don't accept debit cards, and neither do many hotels (the theory being you could have money in the account when they check the balance, then remove it) and having no credit score makes it difficult to buy large things, as other have said. The earlier you have a card, the easier it is to build credit, if you are responsible with it.

NoSoup · 01-06-2006, 09:59 AM

Quote:

Originally Posted by Rodney

Just out of curiousity: by today's standards, does the old standard 20 percent down count as a "very large" downpayment? Because if it does, mortgage lending has gone to hell...

I would bet than less than 5% of my purchase transactions involve a full 20% down. In fact, I would bet that over 70% of my purchase transactions involve no money down at all.

I'm not so sure if mortgage lending has gone to hell, I think it is more likely people's financial position has gone to hell - not to mention the perception of the average buyer was at one time that they needed 20% down, and now - especially with everyone advertising it - they find it distasteful if the are required to put any money down.

The mortgage industry certainly hasn't help people get away from this mindset, though - more and more products are coming out to help people finance a home with no money down...

snowy · 01-06-2006, 01:47 PM

Quote:

Originally Posted by Kadath

All right. I will say that I didn't have a credit card for a long time, and things got harder and harder for me. Rental car companies don't accept debit cards, and neither do many hotels (the theory being you could have money in the account when they check the balance, then remove it) and having no credit score makes it difficult to buy large things, as other have said. The earlier you have a card, the easier it is to build credit, if you are responsible with it.

I've yet to have this problem with my debit card, and yes, I've used it in hotels and while traveling pretty extensively.

Bossnass · 01-06-2006, 02:22 PM

I used to travel extensivly with a debit card, but didn't like the idea of prepaying a deposit that would be returned into my acount a week later. I remember trying to rent a scooter with a debit deposit the same day I checked into a hotel and having problems. Not that I didn't have money in the account, but that I had exceeded my (already increased) daily limit. I needed to spend about 150, but needed to deposit 10 times that amount. It simply made travel more difficult.

Also rather difficult to make online/telephone purchases without a credit card.

I also used to own and operate a boat rental operation. I intentionally made it difficult to rent without a credit card; not having one is usually a good indication that the renter has less available money/is less responsible than someone with a card. Not always true, but I had less problem giving the keys to a 25000 ski boat to someone with a platinum card than letting someone with a wad a cash/debit card rent a 1500 fishing boat.

I was able to finance the boats (I was 20) because I had a sears card, a Bay card, and a Canadian Tire Card, which I all was able to get because of a starter mastercard(18). I've since bought a truck and cars(21). I hold half a dozen credit cards -all paid off every month. I took out a mortgage on a 200,000 condo(22). I'm not terribly proud that I will be in debt for the indefinate future, but I am proud that I have credit if I need it, that I drive a reliable vehicle, and that I'm paying down a mortgage instead of paying down the mortage for a landlord.

I've also gone back to school for the last three years and only work 4 months out of the year. I don't have a huge income, but I have decent credit. My brother recently bought a Dell laptop for christmas. Shame he couldn't pay for it with his online banking. I put it on a credit card and he cut me a cheque.

I was stuck at the Tampa, Fl airport on tuesday. The cruise disembarkment had been delayed due to fog, flights had been missed. My wife, sister-in-law, and her husband had taken time off and all very much needed to be at work the next morning here in Alberta. We were told to make flight arrangments to be reimbursed by the cruise line, and I did so for all 4 of us. However, it would have been impossible to make it home in time if I didn't have a credit card to throw down.

Get a credit card. Use it wisely. It makes life much easier.

Rodney · 01-06-2006, 04:30 PM

I should say that I have one charge card for emergencies: an Amex card. But it's a charge card, not a credit card. You're _supposed_ to pay it off by the end of the month. They threaten great harm if you don't. I have used it perhaps three times in five years.

To my great dismay, of course, I find that American Express is trying to make the Amex card more like a credit card, by offering you the option of carrying debt longer -- just sign this form. Pah.

hemiram57 · 01-07-2006, 11:39 AM

Getting a credit card is a must. My parents got me a credit card when I was 16 and it has helped me build a great credit history. I didn't use it much untill I was in college but having a good credit history is very important. Like others have said, just make sure to pay if off every month. Dont charge something on it that you know you will not have the money for when the bill comes.

darkangel · 01-14-2006, 04:28 AM

Thanks everyone for your replies, sorry I've been slow..

I guess I just don't want a credit card because I don't even want the temptation to be there. Oh, I want a new guitar? I don't get paid for 2 weeks, but I'll just put it on the card now, and pay full price in 2 weeks..

2 weeks later.. Oh look, a new amp.. etc..

I could very prone to do that sort of thing, so right now I'm just avoiding it completely. Right now in my point of life I don't think I'll be faced with having to rent a car or buy a house, but who knows what'll happen in the future. Would you need one for any reason to buy a plane ticket/airport business?

It sucks that the word is revolving around plastic..

Kadath · 01-14-2006, 07:48 AM

Quote:

Originally Posted by darkangel

Thanks everyone for your replies, sorry I've been slow..

I guess I just don't want a credit card because I don't even want the temptation to be there. Oh, I want a new guitar? I don't get paid for 2 weeks, but I'll just put it on the card now, and pay full price in 2 weeks..

2 weeks later.. Oh look, a new amp.. etc..

I could very prone to do that sort of thing, so right now I'm just avoiding it completely. Right now in my point of life I don't think I'll be faced with having to rent a car or buy a house, but who knows what'll happen in the future. Would you need one for any reason to buy a plane ticket/airport business?

It sucks that the word is revolving around plastic..

Well, you're going to have to learn to exercise self-control at some point. That's just part of adulthood. You're going to want to get beyond hand to mouth.

As a rule of thumb, the only time you can use a credit card but not a debit card is when you are putting it form as indication you'll pay later, like to cover a hotel minibar or a rental car (although I've used a debit card to cover incidentals in a hotel, it really depends on how much the hotel has been burned by people with debit cards in the past). If you're worried about getting out of control, get a secured card with a low limit, like $500. You put the 500 down when you get the card, but pay it off like a credit card every month. That way it can never get out of hand because the money's always there.

It does suck that world revolves around plastic, but there it is. It's easier to do things when you play by the rules.

01-01-2006, 11:30 PM	#1 (permalink)
darkangel Crazy Location: AB, Canada	Do I Really Need a Credit Card? I'm 20 years old, I live at home, and I've never had a credit card, and I really don't want one. Everything I buy comes from cash/debit. I bought my car privately, paid through my cough one year of college with cash etc. Do I really NEED a credit card? I've seen first hand what debt does to people and I really don't want to get into all of that. I'm 99.9% sure that whoever I marry will most likely have some sort of debt, so I could be tangled up anyway.. but what do you guys think? I obviously don't have that much life experience yet. __________________ "I'm gonna die when it's time for me to die.. so let me live my life the way I want to." - Jimi Hendrix

01-06-2006, 09:38 AM	#9 (permalink)
Kadath Muffled Location: Camazotz	All right. I will say that I didn't have a credit card for a long time, and things got harder and harder for me. Rental car companies don't accept debit cards, and neither do many hotels (the theory being you could have money in the account when they check the balance, then remove it) and having no credit score makes it difficult to buy large things, as other have said. The earlier you have a card, the easier it is to build credit, if you are responsible with it. __________________ it's quiet in here

01-14-2006, 04:28 AM	#15 (permalink)
darkangel Crazy Location: AB, Canada	Thanks everyone for your replies, sorry I've been slow.. I guess I just don't want a credit card because I don't even want the temptation to be there. Oh, I want a new guitar? I don't get paid for 2 weeks, but I'll just put it on the card now, and pay full price in 2 weeks.. 2 weeks later.. Oh look, a new amp.. etc.. I could very prone to do that sort of thing, so right now I'm just avoiding it completely. Right now in my point of life I don't think I'll be faced with having to rent a car or buy a house, but who knows what'll happen in the future. Would you need one for any reason to buy a plane ticket/airport business? It sucks that the word is revolving around plastic.. __________________ "I'm gonna die when it's time for me to die.. so let me live my life the way I want to." - Jimi Hendrix

01-02-2006, 05:11 AM	#2 (permalink)
Xazy People in masks cannot be trusted Location: NYC	You need a credit card so you have a credit history; my recommendation is to just pay it off every month. It may not be important at 20, but it will be later on, if you want to finance a car, get a mortgage etc…

01-06-2006, 02:22 PM	#12 (permalink)
Bossnass Détente Location: AWOL in Edmonton	I used to travel extensivly with a debit card, but didn't like the idea of prepaying a deposit that would be returned into my acount a week later. I remember trying to rent a scooter with a debit deposit the same day I checked into a hotel and having problems. Not that I didn't have money in the account, but that I had exceeded my (already increased) daily limit. I needed to spend about 150, but needed to deposit 10 times that amount. It simply made travel more difficult. Also rather difficult to make online/telephone purchases without a credit card. I also used to own and operate a boat rental operation. I intentionally made it difficult to rent without a credit card; not having one is usually a good indication that the renter has less available money/is less responsible than someone with a card. Not always true, but I had less problem giving the keys to a 25000 ski boat to someone with a platinum card than letting someone with a wad a cash/debit card rent a 1500 fishing boat. I was able to finance the boats (I was 20) because I had a sears card, a Bay card, and a Canadian Tire Card, which I all was able to get because of a starter mastercard(18). I've since bought a truck and cars(21). I hold half a dozen credit cards -all paid off every month. I took out a mortgage on a 200,000 condo(22). I'm not terribly proud that I will be in debt for the indefinate future, but I am proud that I have credit if I need it, that I drive a reliable vehicle, and that I'm paying down a mortgage instead of paying down the mortage for a landlord. I've also gone back to school for the last three years and only work 4 months out of the year. I don't have a huge income, but I have decent credit. My brother recently bought a Dell laptop for christmas. Shame he couldn't pay for it with his online banking. I put it on a credit card and he cut me a cheque. I was stuck at the Tampa, Fl airport on tuesday. The cruise disembarkment had been delayed due to fog, flights had been missed. My wife, sister-in-law, and her husband had taken time off and all very much needed to be at work the next morning here in Alberta. We were told to make flight arrangments to be reimbursed by the cruise line, and I did so for all 4 of us. However, it would have been impossible to make it home in time if I didn't have a credit card to throw down. Get a credit card. Use it wisely. It makes life much easier.

01-06-2006, 04:30 PM	#13 (permalink)
Rodney Observant Ruminant Location: Rich Wannabe Hippie Town	I should say that I have one charge card for emergencies: an Amex card. But it's a charge card, not a credit card. You're _supposed_ to pay it off by the end of the month. They threaten great harm if you don't. I have used it perhaps three times in five years. To my great dismay, of course, I find that American Express is trying to make the Amex card more like a credit card, by offering you the option of carrying debt longer -- just sign this form. Pah.

01-07-2006, 11:39 AM	#14 (permalink)
hemiram57 Upright	Getting a credit card is a must. My parents got me a credit card when I was 16 and it has helped me build a great credit history. I didn't use it much untill I was in college but having a good credit history is very important. Like others have said, just make sure to pay if off every month. Dont charge something on it that you know you will not have the money for when the bill comes.