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Do you really need a credit card?

Credit cards are excellent financial tools when used right. Unfortunately, most consumers see it as free money. When they use it, they spend it without qualms even knowing the high interest rate and possibility of drowning themselves in debt.

With so many people stuck in credit card debt, you can’t really blame financial advisors who shun credit cards. But is it really wise to simply turn your back on them like some others do?

To answer the question, we have to talk about credit score. In today’s financial time, credit score plays a major role in most, if not all, aspects of your finances. If you want a mortgage loan, for example, have a good credit history is a requirement. The same is true for other personal loans and even applications such as a mobile phone contract. A good credit score, in other words, is critical in today’s day and age whether you like it or not.

One way to build a good credit score is to build a credit history. If you’re fresh out of college with no credit history, applying for a credit card is one way to do it. Credit cards, therefore, are useful in this respect. The trick is to make sure that you use your cards responsibly and pay them in full each month. Doing so will reflect on your credit files ensuring that you’ll get a good credit score in the end.

Rather than shun credit cards because of its high interest rates, it’s best to pick one you can use responsibly. When using the card for purchases, keep your eye on the goal, which is to build a good credit history that will help in several ways later on. Meaning keep the charges to the bare minimum, ideally below 30% of your credit card balance.