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Why should I have a credit card at all? What if I never want to use one?

By , CardRatings Contributor

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Great question. Now that prepaid debit cards give you many of the same features and benefits as credit cards, but without the threat of finance charges, you can make the case for living without credit cards at all. However, I can think of a few reasons why you might want to keep a rewards credit card in your wallet.

Years ago, banking executives complained loudly about consumers who carried their credit cards without running up a monthly balance. Then, personal lending flipped itself upside down. Today, many credit card product managers believe they'll make as much money from transaction charges as they will from late fees and interest payments. That's changed the dynamic for rewards credit cards and cash back credit cards, designed to entice consumers to float their purchases for 20 or 30 days.

Here's why I think you should carry at least one rewards credit card:

  • Purchase protection. Cash, checks, and most debit cards won't help you get your money back when your flight gets cancelled or your new gadget busts. Federal laws and bank policies favor credit card holders in most disputes. Even during a charge-back investigation, it's the bank's money on the line, not yours.
  • Credit report impact. Contrary to popular belief, credit scores don't measure how much debt you're in. They report how well you manage your accounts. If you don't have a credit card to maintain, there's nothing to score. That can cause problems when employers and insurance companies use credit scores to evaluate you for jobs or policies.
  • Rebates and bonuses. Retail industry lobbyists complain about high transaction rates, but there's no indication that making purchasing platforms cheaper will trickle down to the consumer. Cash back credit cards offer discounts of up to 6 percent on purchases you make in person. Stack special rebates of up to 20 percent when you shop from your credit card company's website, and you can enjoy some serious savings.

Depending on your lifestyle and your spending habits, you might even consider a travel rewards card that offers bonus miles, room upgrades, or free baggage check. Just pretend your credit card's a debit card, and set aside the cash you'll need to pay your balance each month. That way, you won't risk running up a pile of debt you can't handle.


  1. Ray August 27, 2012 - 3:17 pm
    I don't have a credit card and I don't want one. It seems like the system is rigged in the favor of credit companies. If you don't let us shave some percentage for your purchases we are going to punish you with a lower credit score. While in reality I am probably more financially sound than most.

    Enjoyed your article though.
      Reply »  
  2. Dan August 27, 2012 - 12:51 pm
    Joe Taylor JR Must work for a bank, or at least earns based off of the industry.

    How can you justify your article. Please tell me where you do your research so that I can avoid the same mistakes.

    Purchase Protection: You get the same rewards and protection as a credit card with most debit cards and dont have to worry about borrowing money from the bank at 10-24% Interest.

    Credit Report Impact: How can you say it is not a rating of your debt? If you have no Debt you have no score, you said so in your article. It is a rating of how well you manage your debt, I will agree to that.

    If you have no debt and you have no credit score, but you have managed your money well, your checking and savings accounts will speak volumes over any possible credit score, add to that a paid off mortgage and no car payment? If you would not hire me, I would'nt work for you anyway.

    Rebates and Bonuses: Just the same as I started out, a majority of the banks offer similar or same rewards programs for the use of the Debit Card. Besides, what good does the reward at 6% do if you are paying 10% or more in the end anyway?
      Reply »  
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