Do You Need a Credit Card?
By Steve Gillman
If you don't already have one, you might wonder if you need
a credit card. In most cases the answer is yes. If you live in
any country with a well-developed economy, credit cards are more
than just a convenience. For example, in the United States it
is nearly impossible to do some things without them, like rent
a car. We live a ways from the nearest airport, and without a
card we would have to drive two hours round-trip just to buy
plane tickets for any trip we planned.
You need a credit card if you want to travel easily in general.
It is dangerous to carry large amounts of cash, and in some cases
you will be unable to call ahead and make hotel reservations
if you plan to pay by check. So for travel - and many other things
- you need a credit card. A cash back credit card can be ideal
if you're able to pay your balance off in full each month. But
what if you have difficulty getting one, or what if you can't
seem to stay out of trouble when you have credit cards?
First, if you have never had a card, or if you have ruined
your credit and so can't get one for that reason, don't despair.
There are a few things you can try. First, you can start to handle
credit responsibly so you won't run into this problem in the
future. That, of course, may not help you right now, so what
can you do to get that card this week?
You can be put on someone else's card. If a spouse, family
members or really good friends want to help you out, they
can add you to a card that they rarely use, and allow you to
use that account. This isn't as risky for them as it might seem.
They can add you to a card that has a low limit. If the limit
is $300, for example, that is about the most they can lose if
you cannot or do not pay the balance due. Furthermore, as the
primary person on the account, your friend will get the statements
and so know if you are paying on time.
Now, if you are planning to actually run a balance, be sure
to pay attention to the interest rate. Many cards have a variable
rate, which is based on the prime rate plus a percentage (Prime
plus 5%, for example). If you have a balance on an existing card,
you might want to see if you can do a 0% balance transfer, which
some companies offer for a specified time.
A second option is to open a checking account and get a Visa
or MasterCard debit card to go with it. This is often easier
than getting actual credit, since your card will be limited to
the amount that you keep in your account. That's a great way
to keep yourself out of trouble too. You can only spend everything
you have, and as bad as that sounds, it's a lot better than spending
more than you have.
If you need a credit card and there are no friends who are
willing to add you to theirs and no banks willing to trust you
with a checking or savings account debit card, there is another
option. Get a parent or friend to open a bank account with your
name on it and get a debit card for you as well. This is often
possible even when you do not qualify on your own.
The point here is that you will be the one to fund the account,
so your friend will have less risk. He or she can just forget
about the account as long as the statements look okay when they
come in the mail. Meanwhile, you will have to deposit money to
cover the debits. A Visa or MasterCard debit card typically functions
just like a credit card with one exception; it can be more difficult
to get false charges refunded to you, so handle it with care.
You can also get a prepaid credit card at many stores (WalMart
carries them at the moment). If you need a credit card for travel
or for unexpected needs, this is the quickest way to get one.
You pay cash and the card can be activated immediately. Keep
in mind though, that if you plan to rent a car using one of these,
you will need a hefty balance on the card. Rental companies will
need to charge you the full amount plus put a hold on $100 to
$500 for any damage or extra charges that you may have to pay