It’s not a secret that the number of credit card owners in the United States keeps growing. A recent study, conducted in 2018, revealed that over 72% of American adults owned one, even though they weren’t using them.
Even though they are blamed by many, credit cards do come with some advantages, as long as they are used with care. And in order to understand why not having a credit card can become an issue, let’s talk about three reasons why this can actually cost you money and complicate your financial life.
Building your credit can become harder
Technically speaking, a credit card is, by far, the simplest way of building credit. If you use it and make payments by the due date, you will end up having a good payment history, which is the most important factor taken into consideration when calculating your credit score.
Sure, it’s not exactly impossible to build a credit score without a credit card, as other types of payments can help you with this. But again, through a card, it becomes way easier!
You won’t earn any rewards or bonuses
When it comes to providing value for cardholders, credit cards don’t disappoint, as most of them offer rewards, in different forms.
Simply put, you can earn rewards for almost any purchase, no matter the type of card you’re using. And these can help you up to a few hundred per year! Oh, and we shouldn’t forget about the sign-up bonuses, which can reach even $500 or many – MANY! – points, when opening a new card.
You won’t benefit from increased finance security
Last but not least, credit cards have one more major advantage over traditional cash and debit cards: the increased levels of security.
Credit cards, just like debit cards, do offer fraud protection. Still, there are a few key differences between them!
First of all, you can be liable for up to $50 in credit card fraud, while most issuers have zero-liability policies. On the other hand, legal liability for debit card fraud can vary, depending on how quick you are with reporting it. If you take too long, we have some bad news: there’s no limit.
Also, in case of debit card fraud, your money will be gone from your account. Yes, you can dispute it, but the process involves a lot of investigation before getting everything back. In contrast, in case of credit card fraud, you won’t be out of money and you can dispute the theft, without paying any unauthorized charges.
To wrap it up, we can say that such drawbacks of not owning a credit card can really make you think twice before saying no to any kind of offer! But again, as long as you use them wisely and don’t collect debt, credit cards can be some really useful financial instruments!
