Never had a credit card, should I get one?

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ksleo
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Never had a credit card, should I get one?

Post by ksleo » Wed Jan 18, 2017 12:08 pm

Hi Bogleheads, I've lurked for several months absorbing the collective wisdom here and now have a question.

I've never had a credit card in my life; in fact, I've never been in debt of any kind. My wife and I even paid cash for our first and current home in flyover country so I truly have no experience with debt. I now find myself wondering, though, if I should get a simple cash back credit card (assuming I got approved, I could probably get the USAA card that offers unlimited 1.5% back). Logic is telling me to go ahead and get it, but emotion is telling me not to, so I'm seeking advice.

Logic says I'm leaving money on the table by not having the credit card. Our expenses are low so we'd probably only get back $350-$450 in a year, but when I think of it long term I realize that I'm foregoing around $4,000 over ten years. That makes it sound ridiculous not to have a credit card. Couple that with the fact that my paychecks could be deposited to my savings account and earn extra interest in the interim each month until the bill was due and I'm probably leaving even more money on the table.

Emotion is telling me I've never had a credit card and since I don't need one there's no reason to get one. I grew up listening to Dave Ramsey so the only thing I've ever heard about credit cards is the horror stories. i.e. changing the due dates on bills to force you to pay interest, changing terms of the agreement suddenly, refusing to acknowledge the posting of payments to allow interest to accrue, etc.

To be clear, my intention is to never pay interest or carry a balance, this would be strictly for the purposes of getting cash back. Is it worth it for around $400 per year? What are your experiences/recommendations?
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SimonJester
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Re: Never had a credit card, should I get one?

Post by SimonJester » Wed Jan 18, 2017 5:58 pm

Its sort of a personal decision, I went 7 years with no credit cards and 5 years with debt what so ever and have decided to get back into the game so to speak. The reason I decided to get a credit card is as you said to get the cash back rewards and to be able to eventually get a credit card with no foreign transaction fees.

Don't be surprised if you are turned down for several card as you probably have a thin file with no score. Your bank is probably the best bet to get a card from.

For me it wasnt worth it for the cash back alone, but wanting to travel internationally in the future the no transaction fee cards pushed me back into credit cards.
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sport
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Re: Never had a credit card, should I get one?

Post by sport » Wed Jan 18, 2017 6:02 pm

As long as you pay the balance in full each month, credit cards are a useful tool with no downside. If you travel at all, a credit card is almost essential. You need one to make hotel reservations, plane reservations, or to rent a car. There are other benefits such as extended warranties. The rebates are icing on the cake. You just do not want to pay those interest rates on any unpaid balances.

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Re: Never had a credit card, should I get one?

Post by oldcomputerguy » Wed Jan 18, 2017 6:04 pm

SimonJester wrote:Its sort of a personal decision, I went 7 years with no credit cards and 5 years with debt what so ever and have decided to get back into the game so to speak. The reason I decided to get a credit card is as you said to get the cash back rewards and to be able to eventually get a credit card with no foreign transaction fees.

Don't be surprised if you are turned down for several card as you probably have a thin file with no score. Your bank is probably the best bet to get a card from.

For me it wasnt worth it for the cash back alone, but wanting to travel internationally in the future the no transaction fee cards pushed me back into credit cards.


I think that for us the biggest benefit is not so much the rewards but rather the help it gives in streamlining and controlling our monthly purchasing. Putting everything (as much as possible) on a credit card, then paying it off at the end of the month with a mouse click, saves me quite a bit of time, and letting Mint analyze the spending done helps me stay with my monthly budget.

(BTW, love the nym, great to see another Heinlein fan!)
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Re: Never had a credit card, should I get one?

Post by brokendirtdart » Wed Jan 18, 2017 6:09 pm

OP, you mention USAA. Do you bank with them?

If so, and if you qualify, they are slowly rolling out a 2.5% cash back card. Some details in the thread below. https://www.bogleheads.org/forum/viewtopic.php?t=201331


While i won't weigh in on a decision to go all cash or get a credit card, the convenience is what sways me. I use credit for just about everything, while keeping cash only for certain face to face transaction.

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Re: Never had a credit card, should I get one?

Post by Zecht » Wed Jan 18, 2017 6:18 pm

Personally I've found credit cards to be the ideal method to "save" for international travel, hotels, and similar things given the quality of rewards programs and the amount of money I usually spend each month. If you have the income and discipline to only buy and pay for things that you have the income to cover each month, than you should definitely get one.

I currently use 3-4, Chase Freedom for categories, Sapphire Reserve for travel and general consumption, and the PenFed card for gas (when it's not a Freedom category). It's a bit of a hassle sometimes, but in a year I easily earn enough points for 2 international plane tickets, which are not getting any less expensive.

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Re: Never had a credit card, should I get one?

Post by jf89 » Wed Jan 18, 2017 6:18 pm

My grandfather was the same way: Never carried debt in any form (home, car, cards). Then when he retired, most of his money was tied up in a business, but he wanted to move out of his small home worth practically zero into a bigger home in a retirement community, so he thought "I guess it's time for a mortgage". He was denied repeatedly because, as far as the credit bureaus were concerned, he didn't exist and was extremely high risk. It ended up taking my father to cosign on his loan to have it approved.

I think this story has two pieces of information in it for you:

1) Don't just assume you'll be approved, let alone approved for the best cards or rates, because it sounds like you don't exist to the credit bureaus.

2) Credit is sometimes necessary or convenient, whether you need it now or not. I think regardless of the cash back in the form of points, the flexibility of having any credit rating beyond "does not exist" is priceless (as long as it's used responsibly). Look into ways of building a credit history like paying off your credit card monthly after the statement is generated and taking out a small secured loan.
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Ace$
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Re: Never had a credit card, should I get one?

Post by Ace$ » Wed Jan 18, 2017 6:22 pm

At this point, I wouldn't.

Studies have shown that the dollar amount of purchases is greater when plastic is used (credit more than debit) vs. cash. The study cites the pain of parting with cash vs. the ease of swiping a plastic card as the primary reason. We do have a CC we use for online purchases and my business travel, but we primarily use electronic checks for bill paying and cash for most everything else except gas at the pump or groceries.

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Pajamas
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Re: Never had a credit card, should I get one?

Post by Pajamas » Wed Jan 18, 2017 6:27 pm

You are paying more for everything you buy if you don't use a rewards card. 1 1/2% or more savings on everything you can buy with a credit card instead of using another method is a significant amount over time.

Using a credit card does not necessarily mean debt. You can use a credit card like a charge card and have the balance paid in full by automatic transfer from your bank account each month and never pay interest. I have done that for years and never had a problem with it and have never paid interest or fees. Not only do you get the card rewards, you get a little extra interest on your bank account from having the money sit there for a month before the credit card payment is made. With a debit card, the money comes out on an ongoing basis.

There are some other advantages to some credit cards such as extended warranties and included collision insurance coverage when renting a car. The ability to make chargebacks is an important advantage that has helped me several times.

http://www.investopedia.com/articles/pe ... better.asp

If you are using cash and checks instead of a debit card, a credit card is much more convenient than either of those. No need to write a check or make ATM withdrawals. I make maybe three or four cash withdrawals a year to cover small purchases that must be made with cash.

conroy
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Re: Never had a credit card, should I get one?

Post by conroy » Wed Jan 18, 2017 7:34 pm

Yes, get a credit card, even if you don't want to use it much.

It's not even really about the cash back, it's about having a history.
If you ever need credit in the future for any reason, having a credit history will be very helpful (see the above warnings about how you may even have trouble getting your first credit card due to lack of history)

Just make sure you don't get a card with an annual fee, given your aversion to credit

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Re: Never had a credit card, should I get one?

Post by ksleo » Wed Jan 18, 2017 8:28 pm

brokendirtdart wrote:OP, you mention USAA. Do you bank with them?

If so, and if you qualify, they are slowly rolling out a 2.5% cash back card. Some details in the thread below. https://www.bogleheads.org/forum/viewtopic.php?t=201331


While i won't weigh in on a decision to go all cash or get a credit card, the convenience is what sways me. I use credit for just about everything, while keeping cash only for certain face to face transaction.


I appreciate the link. I followed that forum and found a link to the 2.5% back card, it doesn't seem to be available in my state yet based on the other posts in that forum.

To those who have mentioned the credit bureaus you are correct. I have no credit history at all. I realize that could be a hindrance to getting a card, though hopefully not too much since USAA just sent me a flyer for the 1.5% card.

Most people are mentioning the convenience of the credit card. Incidentally, I have never had a convenience issue with a debit card. I almost never carry cash and can accomplish anything with a debit card (including hotel reservations and so forth). I guess a simpler way of asking my question is "In your experience are the credit card companies too squirrely to make it worth the effort to chase the cash back?" It sounds like the answer is no so far, but I appreciate everyone's experiences so far, so please keep them coming. :happy
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Ged
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Re: Never had a credit card, should I get one?

Post by Ged » Wed Jan 18, 2017 8:37 pm

Consumer protections are not as good with a debit card. It's a serious reason to use a credit card instead.

rgs92
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Re: Never had a credit card, should I get one?

Post by rgs92 » Wed Jan 18, 2017 8:39 pm

Wow, I've never heard of not having a credit card in modern life. It seemed most people had them even back in the 60s.

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Re: Never had a credit card, should I get one?

Post by prudent » Wed Jan 18, 2017 8:46 pm

I find no downside to using a credit card. If it gets hacked/stolen/copied/whatever, I still have all my money unlike with a debit card. The cashback rewards are meaningful although not life-changing (probably $1000+/year). I have an advocate if a vendor tries to scam me or simply does not deliver. I get credit card benefits like reimbursement for accidental damage on items for 90 days after purchase, extended warranties, price-matching refunds, etc. There are other perks I don't care about but others might. They sometimes give you leverage with a vendor where you can offer to pay cash in exchange for a discount. Sometimes a card I haven't used for a while will send me an offer for 5% cashback up to $100 good for 3 months.

I am certain I do not buy more even though I use my card almost everywhere I can. So I don't see any drawbacks at all.

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Re: Never had a credit card, should I get one?

Post by Sandtrap » Wed Jan 18, 2017 8:46 pm

Ged wrote:Consumer protections are not as good with a debit card. It's a serious reason to use a credit card instead.

+1
If not, for this reason alone. Debit cards are nowhere near as protected. Also for travel, rental car, etc. As long as balances are paid in full every month. And, money spent is not more than if you did not have a credit card, because it's so so so easy to spend with it.

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Re: Never had a credit card, should I get one?

Post by 123 » Wed Jan 18, 2017 8:59 pm

I paid cash for pretty much everything (except for gas and travel expenses) for many years. I decided I was losing out on some of the credit card rewards/bonus stuff so I gave up cash for the most part. I always pay the credit card bill in full every month. I now have a far better idea where the money goes since I get a listing of all charges each billing cycle. I still keep a couple hundred $$ in the wallet just cause its a hard habit to break and there's always a chance of a credit card problem.
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Re: Never had a credit card, should I get one?

Post by DSInvestor » Wed Jan 18, 2017 9:04 pm

ksleo wrote:To be clear, my intention is to never pay interest or carry a balance, this would be strictly for the purposes of getting cash back. Is it worth it for around $400 per year? What are your experiences/recommendations?


Since you will never carry a balance, there is little downside to using credit card.

Note that some cards have extra features that could result in much more than $400 cash back. For example, Citi Double Cash offers 2% cash back and also has CITI Price Rewind that will refund the price difference if a lower price is found within 60 days of purchase. I spend about 24K/yr on this card and the 2% cash back is around $480. The CITI Price Rewind benefit resulted in about $1000 back in 2016 because the service found lower prices for me after my purchases. No annual fee.

I shop at Costco and the Costco card gives me 4% back on gas, 2% cash back for costco purchases, 1% on everything else. No annual fee.

Capital One QuickSilver offers 1.5% cash back but has no foreign transaction fee. No annual fee. This is the card we use for foreign spending.

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Re: Never had a credit card, should I get one?

Post by Wildebeest » Wed Jan 18, 2017 9:11 pm

Ace$ wrote:At this point, I wouldn't.

Studies have shown that the dollar amount of purchases is greater when plastic is used (credit more than debit) vs. cash. The study cites the pain of parting with cash vs. the ease of swiping a plastic card as the primary reason. We do have a CC we use for online purchases and my business travel, but we primarily use electronic checks for bill paying and cash for most everything else except gas at the pump or groceries.


No and I would be proud of never having a credit card.

Too late now.The evidence is overwhelming. People, who have plastic overspend and overpay.

I wish I am where you are and had not given in to the 2 % cash back card or the 3 % cash back when traveling. ( I could go broke "saving money")

I used to whip out a credit card, and then the waiter would come out and clearly feel bad that my card was rejected. Everybody at the dinner table would feel my pain. Except I would feel no pain that Mastercard, Visa or American Express could decline my credit while I NEVER FAILED TO MAKE PAYMENT for the full amount. Their loss. I would whip out another credit card.

I should have whipped out twenty or hundred dollar bills.

I just hate to be known to carry cash. I would feel like a sitting duck.
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Re: Never had a credit card, should I get one?

Post by GerryL » Wed Jan 18, 2017 10:04 pm

The only people I would advise against having a credit card would be someone who is unable to control their spending. You know yourself. If you can honestly make the commitment to yourself to never carry a balance and to not use a card like it's "free money," then I would say go for it. And you don't even need to carry it with you all the time. You may decide to put it in your wallet only when you are making a planned purchase or when traveling.

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Re: Never had a credit card, should I get one?

Post by JWooden10 » Wed Jan 18, 2017 10:15 pm

As long as you pay the balance in full each month, credit cards are a useful tool with no downside. If you travel at all, a credit card is almost essential. You need one to make hotel reservations, plane reservations, or to rent a car. There are other benefits such as extended warranties. The rebates are icing on the cake. You just do not want to pay those interest rates on any unpaid balances.


+1 on the above as long as you are the disciplined sort where a credit card doesn't cause you to spend more than you normally would. My strong suspicion based on your post is that you have discipline in abundance. Remember you can always agree with your spouse to cancel it if you try for 6 months and one of you happens to decide it just isn't for them.

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Re: Never had a credit card, should I get one?

Post by VaR » Wed Jan 18, 2017 11:53 pm

rgs92 wrote:Wow, I've never heard of not having a credit card in modern life. It seemed most people had them even back in the 60s.

Way back in 1970, people were much more likely to have a retail store card rather than a bank credit card. Looking at bank credit cards, I found the following percentages of households having a bank credit card.
1970 16%
1977 38%
1983 43%
1989 56%
1995 66%
1998 68%
2001 73%
2004 71%

Note that in 1971, 45% of households had a store card.

From: https://www.federalreserve.gov/boarddoc ... 200606.pdf

To the OP, consumer credit, like opioids, are not to be treated casually. Most people will not have a problem, but a certain percentage of people are susceptible to abusing it.

As others have mentioned, chances are that if you get one you will spend more money than you are spending now. And there is a small chance that you will overuse it and start living above your means.

All that said, I love my rewards credit cards. But I learned my lessons about overusing credit back in college. Speaking of which, part of the increase in credit cards availability growth in the 1980's was a marketing campaign by credit card issuers to issue credit cards to college students - who mostly did not have any income. It was very successful. Concerns grew through the 90's about the massive increase in consumer credit utilization.

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BL
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Re: Never had a credit card, should I get one?

Post by BL » Thu Jan 19, 2017 12:15 am

First, have you checked your credit report? You can get them free once a year at each of 3 companies through the gov-authorized web site
AnnualCreditReport.com.

I think trying to get one at USAA is a good idea. Just use it as a safer version of a debit card which lets you build credit so you "exist" in that world. Watch your spending. Maybe later start thinking of more cash-back. Some years ago I encouraged a relative with no military/USAA connections to apply for one there. She had to let them access her checking account in order to get approved since she also was invisible to the financial world. I think everyone should have a couple CCs, one as backup in case the other doesn't work.

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Re: Never had a credit card, should I get one?

Post by StormShadow » Thu Jan 19, 2017 1:19 am

sport wrote:As long as you pay the balance in full each month, credit cards are a useful tool with no downside.

At least one downside... you'll likely spend more.

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Re: Never had a credit card, should I get one?

Post by sport » Thu Jan 19, 2017 1:52 am

StormShadow wrote:
sport wrote:As long as you pay the balance in full each month, credit cards are a useful tool with no downside.

At least one downside... you'll likely spend more.

Some people do, some don't. You have to know yourself. Self-control is a good thing.

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Re: Never had a credit card, should I get one?

Post by g$$ » Thu Jan 19, 2017 1:55 am

You're over thinking this. If you want one, get one. If not, whatever. I bet you could get approved for one in less than 5 minutes online.

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Re: Never had a credit card, should I get one?

Post by The Wizard » Thu Jan 19, 2017 2:46 am

I don't see how one pays for travel expenses and buys stuff online without a credit card .
It has to be a real hassle.
So yes, join the revolution and get a credit card...
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Re: Never had a credit card, should I get one?

Post by The Wizard » Thu Jan 19, 2017 2:54 am

StormShadow wrote:
sport wrote:As long as you pay the balance in full each month, credit cards are a useful tool with no downside.

At least one downside... you'll likely spend more.

So long as one has lots of money, spending it is not a problem.
A credit card is a tool, a facilitator, not a source of income.

On a recent trip, I paid for gas for my rental car with a DEBIT card, directly from my checking account.
For people with sufficient money, this might serve as a replacement for a CC, but with less consumer protection...
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Re: Never had a credit card, should I get one?

Post by GregLily07 » Thu Jan 19, 2017 4:11 am

I've had 15 credit cards in the past, with the total credit line approaching $100,000. I'm credit card free these days and life is better without them. A debit card with a Visa or Mastercard logo will do almost anything a credit card will do. The consumer protection is the same, you can still rent motel rooms, Enterprise will rent you a car. Life is not difficult *as you already know* without a credit card. The people who market credit cards sure do a nice job of convincing the masses they need a card in order to survive in this world though.

Credit cards "reward" at 2% and charge interest at 14%. If you screw up just once and get that 14% hit, it takes many 2% rebates to make up for it! Your putting yourself through this over $350 - $400 a year. If the money is that important to you cut some grass, shovel some snow, take an extra shift at work. But don't give in a get a credit card.

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Re: Never had a credit card, should I get one?

Post by inbox788 » Thu Jan 19, 2017 4:23 am

ksleo wrote:Our expenses are low so we'd probably only get back $350-$450 in a year...


"only"?

No, don't get one. You've made quite a convincing argument against needing a credit card.

How do you pay for stuff online? Or are you not buying anything online? Great way to save! And trying to get a little float is meaningless with today's interest rates.

You'd need to charge over $24k/year to get that much back. That's average of over $2k/month, each and every month. If that's low, I wonder what you'd consider moderate and high.

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Re: Never had a credit card, should I get one?

Post by gst » Thu Jan 19, 2017 6:45 am

GregLily07 wrote:Credit cards "reward" at 2% and charge interest at 14%. If you screw up just once and get that 14% hit, it takes many 2% rebates to make up for it! Your putting yourself through this over $350 - $400 a year. If the money is that important to you cut some grass, shovel some snow, take an extra shift at work. But don't give in a get a credit card.


How do you define "mess up"? Forget to pay? Tempted to carry a balance?

I don't see the slightest problem of having a credit card as long as you have a little bit of self-control. Having a credit card is one decision, deciding to carry a balance is a completely separate decision. I use my credit card whenever possible (due to the 2% cashback) but I just set it to autopay and never carry a balance. I don't see how I could "mess up" there - my spending behavior when using the credit card is exactly the same as with a debit card.

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Re: Never had a credit card, should I get one?

Post by Crisium » Thu Jan 19, 2017 8:27 am

gst wrote:
GregLily07 wrote:Credit cards "reward" at 2% and charge interest at 14%. If you screw up just once and get that 14% hit, it takes many 2% rebates to make up for it! Your putting yourself through this over $350 - $400 a year. If the money is that important to you cut some grass, shovel some snow, take an extra shift at work. But don't give in a get a credit card.


How do you define "mess up"? Forget to pay? Tempted to carry a balance?

I don't see the slightest problem of having a credit card as long as you have a little bit of self-control. Having a credit card is one decision, deciding to carry a balance is a completely separate decision. I use my credit card whenever possible (due to the 2% cashback) but I just set it to autopay and never carry a balance. I don't see how I could "mess up" there - my spending behavior when using the credit card is exactly the same as with a debit card.


The instant I make a credit card purchase I consider it the same as a debit card, or cash - that money is gone forever. That it takes weeks to be paid (auto pay in full) is merely incidental - If I am ever taking a look at my available cash I subtract the current card balance from my checking account. That it gives 2.5% cash back is bonus... it's not an incentive to spend more, but an incentive to always pay with my CC if I must pay for something.

As someone else said, you have to know "you". If you do not spend more, then yes, you leave money on the table by not using a CC. The only exception is to watch for when credit cards get surcharge tacked on. Many Universities and Colleges do this for tuition, and it is usually bigger than the cash back.

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Re: Never had a credit card, should I get one?

Post by The Wizard » Thu Jan 19, 2017 8:45 am

GregLily07 wrote:...A debit card with a Visa or Mastercard logo will do almost anything a credit card will do. The consumer protection is the same...

I'm pretty sure that credit cards still win when dealing with problematic purchases, such as going out of business before delivering on a purchase...
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Re: Never had a credit card, should I get one?

Post by ddurrett896 » Thu Jan 19, 2017 9:01 am

Yes, there are too many benefits in having credit cards to not use them.
1) Credit card opening offers. My wife and I received $1,500 last year just opening cards and using for every day expenses.
2) Points. Probably took home another $500.
3) Expense tracking. Love the year end report showing my spends by category.
4) My favorite - record of what I purchased. When I have returns or defective products, most stores can use my card to track by the purchase with no receipt.

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Re: Never had a credit card, should I get one?

Post by dsmil » Thu Jan 19, 2017 9:36 am

As long as you have your finances in order, and pay the full balance every month, credits card can be great. You can maximize the rewards by receiving sign up bonuses and credit card churning, but even keeping it simple and receiving cash back is nice.

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Re: Never had a credit card, should I get one?

Post by ksleo » Thu Jan 19, 2017 9:42 am

The Wizard wrote:I don't see how one pays for travel expenses and buys stuff online without a credit card .
It has to be a real hassle.
So yes, join the revolution and get a credit card...


I've never had a problem doing all of these things with a debit card. That's what I mean by wondering if the CC is "worth" it - since there would be no added convenience is is the cash back worth the possibility of paying interest.
Actions have consequences.

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Re: Never had a credit card, should I get one?

Post by Maverick3320 » Thu Jan 19, 2017 9:44 am

Two reasons:

1) better purchase protection with a credit card
2) build a credit history

Keep track of your expenses (sounds like you already do) to make sure that the plastic isn't changing your lifestyle.

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Re: Never had a credit card, should I get one?

Post by ksleo » Thu Jan 19, 2017 9:44 am

inbox788 wrote:
ksleo wrote:Our expenses are low so we'd probably only get back $350-$450 in a year...


"only"?

No, don't get one. You've made quite a convincing argument against needing a credit card.

How do you pay for stuff online? Or are you not buying anything online? Great way to save! And trying to get a little float is meaningless with today's interest rates.

You'd need to charge over $24k/year to get that much back. That's average of over $2k/month, each and every month. If that's low, I wonder what you'd consider moderate and high.


Approximately 24K amounts to ALL of our spending in a year. (Remember, we live in flyover country, it's very LCOL here.) I'm assuming I could charge practically all of that 24K including property taxes, utility bills, etc.
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Re: Never had a credit card, should I get one?

Post by SimonJester » Thu Jan 19, 2017 9:45 am

There is a lot of mis information in this thread. As someone who went 7 years without credit cards I can share actual real world experiences.

sport wrote:If you travel at all, a credit card is almost essential. You need one to make hotel reservations, plane reservations, or to rent a car.


This is not true, you can do all of the above with a debit card just fine. There were no differences between CC and debit card in this regards, I saw no massive holds on my debit card / accounts for hotel or rental cars.. I guess the possibility was there but it didn't happen in my case. I believe for the hotel they held one nights charge and rental car was $50.

The Wizard wrote:I don't see how one pays for travel expenses and buys stuff online without a credit card .
It has to be a real hassle.


Not really the only thing I would agree is when foreign travel and transaction fees come into play.


The Wizard wrote:I'm pretty sure that credit cards still win when dealing with problematic purchases, such as going out of business before delivering on a purchase...


Nope, my one experience with this, the debit card money was back in the account before I was off the phone with the banker. CC took 7 days while they investigated.


ddurrett896 wrote:3) Expense tracking. Love the year end report showing my spends by category.
4) My favorite - record of what I purchased. When I have returns or defective products, most stores can use my card to track by the purchase with no receipt.

These are the same with a debit card, #3 depends on the bank but many banks offer this as well. #4 is the same.

Ged wrote:Consumer protections are not as good with a debit card. It's a serious reason to use a credit card instead.


I think this is exaggerated, for the most part the protection are close to the same. There are minor differences and yes if there is an issue with the debit card the bank has 10 business days to return the money to your account vs cc you have not yet paid.

Some other observations CC transactions can take several days to post vs Debit card transactions almost always post immediately. When it comes to alerting I find that debit card was quicker vs CC.
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Re: Never had a credit card, should I get one?

Post by Angelus359 » Thu Jan 19, 2017 10:01 am

I'd suggest getting a credit card, and putting something small, non dangerous, and reoccurring on it, like a Netflix subscription. Set it to auto pay and put it in a drawer.

I did that for a couple years, and then when I got a mortgage for a home, I got the lowest possible interest rates based on credit score
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Re: Never had a credit card, should I get one?

Post by Crisium » Thu Jan 19, 2017 10:02 am

ksleo wrote:
The Wizard wrote:I don't see how one pays for travel expenses and buys stuff online without a credit card .
It has to be a real hassle.
So yes, join the revolution and get a credit card...


I've never had a problem doing all of these things with a debit card. That's what I mean by wondering if the CC is "worth" it - since there would be no added convenience is is the cash back worth the possibility of paying interest.


There is not possibility of paying interest if you set up auto pay in full. Are you worried about overdraft fees when you pay for things with debit card and checks, or a check bouncing? If no, then why not? Likely the same answer for not paying CC interest - you do not spend more than you have.

By all means avoid CCs if you have reason to believe you will spend more. For many Americans this is true. This is probably why Dave Ramsey doesn't recommend them to people who got out of massive debt. It's the Alcoholics Anonymous thing - once you are a debt spender, you are forever, and you should quit forever rather than go for moderation. But unless this applies you you, fear of interest is rather baseless if you have auto pay in full.

edit: The above post is an excellent suggestion. Why not have 1.5% off (or whatever cash back you receive) for recurring bills like Netflix, or phones? With auto pay, that's a great way to make sure you do not overspend just because you have a CC and you get rewarded with some cash back.
Last edited by Crisium on Thu Jan 19, 2017 10:09 am, edited 1 time in total.

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Re: Never had a credit card, should I get one?

Post by Rupert » Thu Jan 19, 2017 10:09 am

Get Dave Ramsey out of your head. His advice is great for people in debt. It has little to no application to people who are disciplined spenders/savers, such as Bogleheads. You should get a credit card for cash back (you really are throwing money away without one) and to establish credit history. While it's great that you have never had to borrow money before, life happens. People get sick. People lose their jobs. People need to borrow money for all sorts of unexpected reasons. And if you ever want to travel outside the country, your debit card won't help you much.

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Re: Never had a credit card, should I get one?

Post by midareff » Thu Jan 19, 2017 10:48 am

I think credit cards are wonderful... that is, when used properly. I would never think of using a card that doesn't provide a benefit of one kind or another, and have a strong preference for cash back. Since we are retired and travel frequently I have added a couple of airline cards for the free checked bag and priority boarding, especially when they throw in 50 or 60K miles which I can use for free air on an upcoming trip. The last two years benefits have been a bit over $5K and everything is set on auto-pay in full.

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Re: Never had a credit card, should I get one?

Post by bertilak » Thu Jan 19, 2017 10:59 am

I think this has all been said above, but in summary:
  • There is NO downside to having a CC if you are disciplined in its use and ALWAYS pay it off completely with every statement. In other words you truly are an adult (or want to learn to be one). All those things you hear from Dave Ramsey are balderdash. (Just looking for a chance to use that word!)
  • Convenience in every-day use. Not having to carry around a wad of cash, not having to replenish that wad on a regular basis. How do you go about this? An ATM machine would be useless to you.
  • Not getting piles of small change to rattle around in and wear a hole in your pocket. Big one: buying groceries.
  • Some things can't even be easily done (perhaps not at all!) without a CC: car rental, airline tickets.
  • Consumer protection. The CC company is generally on your side in any dispute and has the power to make things right.
  • Consolidation of expense tracking. I know that AMEX (at least) keeps track of the various expense categories and you can look at that on their website whenever you want to and they generate an annual report.
  • Cash back.
  • Extended of warranty periods (usually double). I have actually used this. Twice, I think.
Did I miss anything?

[YES I DID: In comparison to a debit card you have much better fraud protection as noted both above and below.
Last edited by bertilak on Thu Jan 19, 2017 11:06 am, edited 3 times in total.
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Re: Never had a credit card, should I get one?

Post by SouthernCPA » Thu Jan 19, 2017 11:01 am

A credit card is another tool in the financial toolbelt. I use mine when we travel and it makes booking hotels, etc much easier as they don't put an excessive hold on cash like they do with debit cards.

It's also nice when I have to pay for expenses for work that I'll be reimbursed for. Never come out of pocket (reimbursed before the bill is due usually) and get the points as well.

The protections are nice as well. With the proliferation of card scanners on gas pumps, hacking, etc it's a lot easier to tell the credit card company to credit back a fraudulent charge than it is to have the bank return cash to your account. I never use my debit card - all charges go on my Amex charge card or Chase Sapphire Preferred. Paid in full at the end of the month.

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Re: Never had a credit card, should I get one?

Post by TRC » Thu Jan 19, 2017 11:04 am

I used to use my Debit Card for everything. I was very anti credit card. Then our debit card account # got compromised and we lost money. We eventually got it back, but it was a hassle. Now we primarily use our credit card and get 2% cash back.

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Re: Never had a credit card, should I get one?

Post by miles monroe » Thu Jan 19, 2017 11:15 am

to respond to a statement the OP made yes, you can use your CC for just about everything -- i usually write one check a month and go to the ATM once a month -- but in my area you can not pay property tax by credit card (unless you pay a "convenience fee" that would make it stupid to do so). same thing with my gas (home not auto) bill.

the suggestion above to get a card and put a recurring monthly charge on it is a good way to get started.

and you are living dangerously if you are paying for gasoline and online purchases with a debit card.

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Re: Never had a credit card, should I get one?

Post by inbox788 » Thu Jan 19, 2017 12:01 pm

ksleo wrote:Approximately 24K amounts to ALL of our spending in a year. (Remember, we live in flyover country, it's very LCOL here.) I'm assuming I could charge practically all of that 24K including property taxes, utility bills, etc.

Even less reason to get a card, because $400 is the maximum IF you could charge everything. You'd be lucky to be able to charge half your bills. There is a cost to using credit cards, and many companies pass that cost on to you, so you wind up paying MORE using a credit card.

How do you pay your bills now? Checks? By US mail? You might benefit from an online bill pay account, and save some stamps. And time if you're comfortable with autopay.

One additional reason not to get a credit card is that you probably don't get too much junk mail. The moment you apply, they sell your name and you'll be getting offer after offer, and you'll never get off the databases.

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Re: Never had a credit card, should I get one?

Post by DaftInvestor » Thu Jan 19, 2017 12:05 pm

You are indeed leaving money on the table. Prices are slightly inflated to accommodate credit card fees so if you aren't getting a percentage back on your purchases - you are subsidizing those of us who are.
I wouldn't settle for 1.5% back. Get the Citi Double-Cash card which gives 2% back and if you shop on Amazon get their card which give you 5% back (and right now they are running a promotion so you will get $70 just for signing up - with approval).

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Re: Never had a credit card, should I get one?

Post by bertilak » Thu Jan 19, 2017 12:09 pm

inbox788 wrote:There is a cost to using credit cards, and many companies pass that cost on to you, so you wind up paying MORE using a credit card.

Not true for most people. Even if you have an annual fee, the cash back covers that easily. I pay (I think) $100 for my AMEX but the cash-back covers that in about three months. The 6% back on groceries builds up fast. And the grocery doesn't charge me any more than if I paid cash. As a matter of fact, nobody charges me more. Some simply don't take AMEX but that's OK since I also have a VISA. That gives me 4% on gas.
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Re: Never had a credit card, should I get one?

Post by Rupert » Thu Jan 19, 2017 12:14 pm

inbox788 wrote: There is a cost to using credit cards, and many companies pass that cost on to you, so you wind up paying MORE using a credit card.


What cost? Not a single merchant I patronize charges more for credit card purchases these days. Only one (a small business that sells breakfast muffins and coffee) requires a minimum purchase amount ($3) for credit cards. Fact is that most purchases today are made with credit cards so, as a previous poster noted, credit card fees are factored into the price of goods and services. Cash customers are paying it too. You are subsidizing my credit card purchases whether you like it or not. Difference is I'm getting cash back from my credit card, and you aren't.

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