Is a credit card necessary?

[KaraBoo]

I'm reading the Dave Ramsey rant thread and many here are saying that due to the way our society/economy operates, having a credit card (and good credit) is absolutely necessary.

Do you think this is true? Explain, please.

(I ask because we are aggressively paying off debt and hope to cut up all the credit cards)

[Maluhia]

Having a debit card with a VISA/MC logo that can be used anywhere a CC can be is necessary IMHO, but having a credit card there instead of debit is not always.

I think DR is against them at all, I think others have found they can have them for backup but not use them and that works for them. It really depends on why you think you do/don't need them and if you can follow Dave's plan enough to never need to fall back on it in our have-it-now society.

[onlyzombiecat]

We have a debit card but haven't had a credit card for years. It isn't really necessary.

[HeatherAtHome]

Right now, we keep a credit card around for emergencies (it's paid off ). Eventually, I would have an emergency fund instead.

BUT I would still keep the credit card around for buying online and other misc and rare uses. I like that it isn't linked with my bank account and that there's extra policies put in place to protect against fraud/theft.

[mirlee]

I disagree. I do a good bit of traveling and a credit card is essential. I would NEVER make a hotel, rent a car, or flight reservation without a credit card. There are protections that you have with a credit card that you don't have with a debit card.


I also NEVER buy anything online using a debit card. Dh used to use his for online stuff all the time until the company started charging him $29.95 a month for three months until we realized it. All of it coming out of our account.

It is easier to dispute a charge with a credit card. You don't put your entire bank deposit at risk.

Also, you will really damage your credit rating by cutting up all your cards. You need to keep the oldest card you have because that is where your history will start from.

I agree that paying down debt is a great idea. Everyone should do it. I also think that in today's world, a credit card is essential.

[amandaleigh37]

I think if you were following DR's plan to a T, eventually you'd be using cash for everything - cars, house, etc. so No, a credit card wouldn't be "necessary". I don't know about anyone else but we are not even close to that sort of wealth... perhaps if we had a house given to us by our parents, and started out paying cash for everything in our lives, we wouldn't have needed one.

[chiromamma]

Originally Posted by mirlee

I disagree. I do a good bit of traveling and a credit card is essential. I would NEVER make a hotel, rent a car, or flight reservation without a credit card. There are protections that you have with a credit card that you don't have with a debit card.


I also NEVER buy anything online using a debit card. Dh used to use his for online stuff all the time until the company started charging him $29.95 a month for three months until we realized it. All of it coming out of our account.

It is easier to dispute a charge with a credit card. You don't put your entire bank deposit at risk.

Also, you will really damage your credit rating by cutting up all your cards. You need to keep the oldest card you have because that is where your history will start from.

I agree that paying down debt is a great idea. Everyone should do it. I also think that in today's world, a credit card is essential.

We cut up our cards, are spending only what we have & we've been able to do all the travel stuff with the debit card. We did this after watching Maxed Out...FICO scores are overrated, CC companies are heinous. I won't give them my business. I'm keeping my money in my local economy.

[chiromamma]

Originally Posted by amandaleigh37

I think if you were following DR's plan to a T, eventually you'd be using cash for everything - cars, house, etc. so No, a credit card wouldn't be "necessary". I don't know about anyone else but we are not even close to that sort of wealth... perhaps if we had a house given to us by our parents, and started out paying cash for everything in our lives, we wouldn't have needed one.

We're doing it and it's not that we have tremendous wealth at all. We have chosen to live well below our means. We thought there was no more fat to trim from the budget but there was and still is. We relied on CC's to take care of essentials, thought we needed them. Now that we don't have them, it's incredibly freeing.

[Amylcd]

It has been 8 years since we last used a credit card. I've never found it to be necessary, even while traveling.

[belltree]

We don't need credit cards. Debit cards are fine, and we do travel a lot internationally, and never had problems in the last 15 years.

Some people believe they need credit cards, so let them believe it, but you can have a wonderful life without a single credit card in your household

[Knittin' in the Shade]

We have no had a credit card in over 7 years, and it's not affected our purchasing ability at all. In that time, we've bought a house (gotten a mortgage), bought (and financed, and paid off) a car, leased a car, rented numerous cars, bought a mattress and furniture (using the store's 0% financing offers, paying off in full after the first billing cycle - we had the cash but there was a 10% discount if you used their financing) All that to say we've had no problem qualifying for credit without the "history" of a credit card. We pay all bills in time, paid student loans on time (DH is paid off, mine is very close) and otherwise did everything *right* to earn andkeep high credit scores. DH's is higher than mine, but he also makes a heck of a lot more money than me, LOL! (I run a micro business from home)

We do both have Visa debit cards attached to our checking, so that's what we use for travelling, etc.

[Shelsi]

Does anyone in a high COL area really buy a house with cash? I find it hard to believe that someone, of moderate income, can really save up $500,000 to just outright buy a house.

I like having a credit card for emergencies. I also though don't have any addiction to it or anything to use it for anything but emergencies. I'm sure some people wouldn't be able to just let it sit in their wallet and not buy the things they see and want asap. That's actually how my dh is with cash lol. If he's got cash in his wallet it will be gone in a matter of seconds. For some reason he doesn't spend when he has plastic.

[Sharlla]

I guess good credit and a credit card is a good thing if you have to rely on borrowing to get by. I haven't had either in several years and I've gotten by just fine. I basically buy what I can afford, which I think everyone should do anyway.

[Amylcd]

In that time, we've bought a house (gotten a mortgage)

We bought our first home last year!

[p1gg1e]

Originally Posted by chiromamma

We cut up our cards, are spending only what we have & we've been able to do all the travel stuff with the debit card. We did this after watching Maxed Out...FICO scores are overrated, CC companies are heinous. I won't give them my business. I'm keeping my money in my local economy.

Love Maxed Out! That really was the reason we went CC free. I Don't want to support that system.

Also using Visa gift cards online is a great way to keep your bank account safe and use a "CC" online...CC issued by you

[Delicateflower]

Credit cards are very useful for travel, buying online. Not that you can't use a debit card, but a low limit credit card is safer.

Also, if you're planning on buying a house you'll want the lowest interest rate you can get, and this is where having a good credit score is important. INsurance rates and things can depend on a credit check, but it's not worth tweaking your score for a few more points here and there just for that.

I'd love to walk into the bank and tell them FICO scores are overrated and they should give me 4.5% because I'm a great person, and very responsible. But somehow I think they might just laugh at me, you know?

[Delicateflower]

Originally Posted by Shelsi

Does anyone in a high COL area really buy a house with cash? I find it hard to believe that someone, of moderate income, can really save up $500,000 to just outright buy a house.

Me either. Even $3 - 400,000 whilst paying rent would take us a good 15 more years, but as a mortgage we can do it in 8 years. Our forever home in our forever town is going to be somewhere between $6-700,000. We'd never get that saving while renting.

[Shelsi]

Originally Posted by Delicateflower

Me either. Even $3 - 400,000 whilst paying rent would take us a good 15 more years, but as a mortgage we can do it in 8 years. Our forever home in our forever town is going to be somewhere between $6-700,000. We'd never get that saving while renting.

I know. I mean we have no debt and we save quite a good chunk every month that goes into various savings & funds and we're still struggling to see if we even want to wait to get 20% down on a house. It sucks that our down payment, around $100K, would actually buy an entire house in some areas.

[AllieFaye]

Originally Posted by Delicateflower

I'd love to walk into the bank and tell them FICO scores are overrated and they should give me 4.5% because I'm a great person, and very responsible. But somehow I think they might just laugh at me, you know?

Are you familiar with manual underwriting? At my credit union, there is a department that handles just that. Granted, it's not as widespread as FICO lending. It's not a quick-and-easy-let-me-just-run-the-score kind of lending. There's more work for both parties, but they are hardly laughable. People who put down 20% on a fifteen year note with full documentation are generally more secure risks for institutions than the sub-prime loans of recent years.

[Pernillep]

Probably not for most people. It definitely is a overstated need in general.
If we could pay cash for everything and had a big enough emergency fund I would feel better about not having one. Right now we don't. Hopefully we will soon.

People who travel a lot for business however may not have the balance on their debit to cover expenses and wait for reimbursement so in that case a credit card really is a needed evil.

We are keeping one for traveling. As long as there is a 0 balance I have no problems with credit cards