Credit Cards

3 reasons life can be harder without a credit card

Image Source: Getty Images

You may be surprised at all the drawbacks of not having a credit card.

Key points

  • Credit cards are an important tool and life can be more difficult without them.
  • It can be more difficult to get a good credit score without a credit card.
  • You’ll miss out on important protections that credit cards provide.

Credit cards can have high interest rates and sometimes cause you financial problems. As a result, some experts like Dave Ramsey and Mark Cuban have recommended avoiding them.

However, in reality, avoiding credit cards is often a bad idea because life can be much more difficult without one. Here are three reasons why that is the case.

1. You will need to find other ways to build credit

In order to get a good credit score, you need to show that you can be responsible with loans. Unfortunately, it can be difficult to find someone willing to give you a loan that you can repay responsibly if you don’t already have a good credit score.

This creates a dilemma for many people, as you can’t get access to the credit you need to get a good credit score because you don’t have a good score yet. Credit cards are one way around this conundrum. Secured credit cards can be obtained by almost anyone and can help you develop the positive payment history necessary to build a good credit score.

And credit cards don’t just help people get a good credit score if they don’t have any credit history. Your score is based on having a mix of different types of debt and using the cards responsibly by paying them on time and within limits. So if you have a credit card, don’t overcharge it and pay your bills on time. This will help you improve your score in the long run.

If you don’t have a credit card, you’ll need to find other ways to show lenders that you can be responsible with loans. This is not as easy as it sounds, as many types of transactions, such as paying rent or utilities on time, are often not reported to the credit bureaus.

2. Money could be tied up when you use your debit card to make a deposit

Not having a credit card can also make life difficult if you need to make a deposit, which is a common requirement when booking things like hotels or rental cars or even making reservations at certain restaurants.

While some companies allow you to use a debit card to make a deposit, this blocks the money in your bank account until you get your deposit back. That’s a much bigger burden than having a hold on your credit card, which doesn’t really limit access to your money.

3. You can’t dispute charges if a merchant lets you down

Finally, credit cards come with important protections, including the ability to dispute a charge if an item you purchased is never delivered or isn’t as promised. If you charge items to a debit card or pay for them with cash, you won’t have this feature.

When you dispute a charge, the credit card company investigates the problem. If it turns out the merchant didn’t do what they said, the card company will initiate a chargeback to get your funds back and you won’t have to pay for the substandard item or service. This can save you a lot of unnecessary financial loss.

For these three reasons, you shouldn’t stop using a credit card unless you have a very, very good reason to do so, such as a complete inability to control your spending. Instead, you should get a card, use it responsibly, and take advantage of the benefits it offers.

The best credit card eliminates interest until 2023

If you have credit card debt, transfer it to this top balance transfer card locks you in with a 0% introductory APR through 2023! In addition, you will not pay an annual fee. Those are just some of the reasons why our experts rate this card as one of the best options to help you control your debt. Read our full review free and apply in just 2 minutes.

Related Articles