As someone who has built advertising sites for credit cards, I believe credit cards are, in essence, evil. They make it too easy to borrow money, which is what you are doing when you are using a credit card. Then, if you borrow too much or forget to pay them back in time, they charge you more through high interest rates.
That said, I have eight credit cards myself. I’d like to dive a little deeper into the topic and share my thoughts on credit cards.
First let’s answer an important question.
Do I need a credit card?
Dave Ramsey is probably the best anti-debt, anti-credit card advocate out there. His fundamental brash stance against any kind of debt is great for the majority of people out there who struggle with it and has helped thousands of people live debt free.
Ramsey talks about your credit score as being an “I love debt” score, but there is one point that I think he chooses to ignore. However, having a good credit scores is important if you ever want to get into real estate or a loan for a small business. Most landlords and rental companies pull credit reports on their potential tenant too. Most people look at your credit score as an “I pay my bills on time” score instead of an “I love debt” score.
Should I have a credit card?
Whether or not you should have a credit card depends on your current life situation. If you are living month-to-month or struggling financially, you should avoid any credit cards. Paying for things with a credit card is not a solution to your money problems because, more than likely, you will end up with bigger debt problems later. If you do have credit card debt and are paying the minimum every month, you should consider making some changes so that you can start paying down your debt as quickly as possible. This is a tricky subject since there are many reasons people get into credit card debt. Don’t let struggle or shame keep you from getting help or advice from people you trust.
What credit card should I get?
There are a mind-blowing ? number of credit-card ? options out there.
What kind of credit card you get depends on your situation and maybe even your personality. Below I outline a few different types of people and the credit cards that I would recommend for them. Also, keep in mind that for any and all credit-cards you get, the first thing you should do is set up automatic payments to pay the full credit statement as a direct deposit from your checking account. This is important, because as soon as you are charged interest, you are feeding the evil credit cards.
1. No Credit Norman
If you’re like Norman and don’t have a credit score yet, then your options are more limited. You’ll be looking for what is called a secured-card. You deposit money and make your own credit limit. Once you’ve built up enough credit, most of these cards can be “upgraded” and you will get your initial deposit back.
Here is an example of a secured-card that I would consider if I had no credit:
2. Simple Susan
Susan should represent most of us. All of this credit card stuff is complicated and there are too many options. Cash back seems nice, but all that other stuff is confusing.
I’d recommend the Citi Double Cash Card to anyone who promises to always pay their balance in full every month. Here’s what you get:
2% on every $1 spent/paid back is pretty great. You don’t need to worry about which categories the card should be used with. If you do venture out to other credit cards chasing rewards and cash-back, pay attention to the annual fees. Things that look good always seem to come with a cost.
3. Traveling Terrance
Terrance has a good grip on his budget (because he uses https://budgets.money) and enjoys traveling with his wife. He’s pretty organized and does a good job of keeping track of things. If you’re like Terrance, then you might start looking into the world of Travel Hacking. I’d only recommend this to people who enjoy chasing deals and spending time on this kind of stuff. If that speaks to you and you have some patience and maybe even a little luck, you can get some free travel deals out of it. There’s a lot of content out there about Travel Hacking, but I’d recommend checking out ChooseFI: Travel Rewards or Money Under 30: How To Start Travel Hacking for solid advice in this area.
That’s about it — for most people, the Citi Double Cash Card is probably enough. If you have any questions or tips to share, please comment! Claps and shares are welcomed.
Check out our Budgets app at https://budgets.money.
P.S. I don’t receive anything for recommending any of these cards or resources, I just genuinely think they’re helpful and the best options out there.
For Continued Reading:
Check out this fun article about how underwear changed Whitney’s perspective on credit cards and debt (by Whitney Lee Sinecoff).
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