Why I Finally Got A Credit Card

When I was in sixth grade, my teacher taught us about credit cards. He had us research the terms of various cards (interest rates, minimum payments, etc.) and calculate how long it would take to pay off a hypothetical $300 purchase – a number which, in elementary school, is huge but not unfathomable. We made graphs and learned about compound interest. I’m not sure about everyone else in the class, but the numbers stuck with me and I’ve been terrified of credit card debt ever since.

So when I got old enough that I was making purchases larger than $2 for candy at the corner store on a regular basis, I went with a debit card. All the convenience of plastic and none of the the horrifying interest rates. I never bought anything I didn’t have cash in the bank for, and thus I am now 24 years old and have never had a credit card.

This has the great benefit of never having had consumer debt at 20% (or higher!) interest rates. However, it also means I have almost no credit history (when I bought my car after college, my dad had to co-sign just because I didn’t have any history), and since I’ll probably eventually want to buy a house, I needed to start building one.

I did research using sites like Nerd Wallet, Credit Karma and The Points Guy (because I am nothing if not obsessive about my research) to find a card that would give me decent rewards even as someone who doesn’t spend much.

The application process took longer than it normally would, since my credit history is pretty bare bones. After applying online, I received a letter in the mail asking for a pay stub and copies of a couple of recent bills, and then had to wait a few weeks longer to hear back.

I ended up being approved, with a fairly low limit – but still higher than my monthly spending excluding rent, so no problem there. I’ve set the balance to be autopaid, so that I’ll be earning the rewards and building my history without accruing debt.

Side note: many people believe that if they pay their balance in full, they aren’t a profitable customer for the credit card companies. False. The companies make a small percentage on each purchase you make with their card, called a transaction fee (which is why some businesses have a discounted price if you pay in cash).

For me, signing up for a credit card was a pretty big financial step. I’ve never had a need for one, since I’ve always had enough in the bank to cover any purchases other than my car, which I financed through a credit union at a fairly reasonable rate, and never saw a reason to leave behind the security of my debit card.

But I saw two large benefits to finally taking the leap:

  • Rewards (This isn’t actually much of a benefit since the 2% rewards will be less than $20/month for me, but I’ll take it)
  • Credit history, so that someday I can be approved for more exciting things like a mortgage.

Moral of the story: Credit cards can be a solid financial tool, if you use them responsibly. And, if you’re a sixth grade teacher, your lessons can keep resonating for a solid 12 years.

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6 thoughts on “Why I Finally Got A Credit Card

    • c90ftw says:

      Hmm.. This was just a rather large debate in Reddit. The debit cards from visa, MasterCard, etc all have fraud protection. IThere are some limits involved whether you use your pin or sign, but lost carry the same protection as a cc. The benefit to cc is the cc company is fighting for their money while the debit card is your own money. As long as 100% of your liquid assets aren’t in your checking account and you can survive the week or so that the bank takes to repay the fraudulent activity, the debit card is just as protected.

      Liked by 1 person

  1. c90ftw says:

    I’m a big advocate for the the debit card. That’s primarily the only thing my wife and I use to make 99% of our purchases. Some call us Dave people, but I disagree. We too have one CC. We only use it every six or so months right before the credit union turns it off, but it offers us some piece of mind. We do not have a high limit on the card, nor would we use it for emergencies – that is what our emergency fund is for – but we have it for foreign travel. I checked with the hotels, airlines, etc before we left to make sure they accepted debit. I just didn’t want to be 3000 miles from home and try to swipe the debit and be told credit only. Ultimately our debit card worked in every situation, but the cc gave us the piece of mind in another country.
    The key point to your post is wrapped up in one word – responsibility. With this one word, the cc company is not an evil being, but just a company to help the transfer of money for goods and services. Good post!

    Liked by 1 person

    • Stacking Twenties says:

      I spent three months in Europe a few years ago and had no problem with the debit card – not even foreign transaction fees! I think it’s definitely a good way to go, and I’m glad I didn’t have access to thousands of dollars of credit as a teenager! I would have stuck with it forever, but the experience of needing my dad to cosign on a car made me realize I should probably at least have the ability to get a loan without my parents’ help 🙂

      Like

  2. blonderbetterfasterstronger says:

    I would think use of the debit card being an issue would be more of a concern of it doesn’t have a CC logo, and can only be used as debit. Either way, you might want to tell your bank/CC that you’re traveling, so they don’t think it got stolen!

    Not an argument that you made, but I don’t understand the argument for using cash, because retailers charge up because of card fees. If they’re giving me a cheaper cash price, I’ll absolutely use cash, but if they don’t I might as well get rewards–because it’s not as though the rest of the world is going to stop using cards.

    Like

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