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Do You Need a Credit Card?

Last Updated: June 27, 2023
3 min read

Key points about: How to decide if you need a credit card

  1. You may need a credit card to make a large purchase securely, or if you don’t have the cash.

  2. Many credit cards allow you to earn rewards like miles or cash back on your purchases.

  3. If you want to raise your credit score, you can build or rebuild your credit with responsible use1.

At its most basic level, a credit card is simply one of many forms of payment, such as cash, debit cards, and checks. Credit cards can be a great alternative when used with care. They offer convenience and benefits in comparison to other forms of payment. But if you’re not careful with how you use it, a credit card can end up working against you.

Reasons you might need a credit card

Credit cards typically offer helpful features and benefits not available with other forms of payment. You may need a credit card for several reasons, from the rewards you can earn to the security that credit cards provide.

You’re interested in credit card rewards 

Credit cards also offer rewards that other types of payment don’t provide. For example, if you want to earn cash back on your purchases, you’ll need a cash back rewards card. If you want to want to earn miles on your purchases, you can choose to go with a credit card that offers travel rewards, like the Discover it Miles Travel Credit Card.

Did you know?

For those with no credit score, student or secured credit cards are a great way to start building a credit history. If your credit score is low and you want to increase it, you can also do so by using a secured credit card responsibly. Unlike a traditional credit card, a secured credit card requires you to put down a security deposit before you start using it. The amount that you put down is your credit limit. Then, you’ll use the card to make purchases just as you would a traditional credit card and be responsible for making at least the minimum payment each month. The Discover it® Secured Credit Card can help you to build or rebuild credit with responsible use1. You can also earn rewards on purchases. Having an established credit history is helpful for applications for unsecured credit cards, auto loans, home mortgages, and other types of credit.

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Credit cards offer you security

Many card issuers—including Discover—have a $0 liability policy if your credit card is lost or stolen. You’re never held responsible for unauthorized purchases on your Discover Card2. If your cash is lost or stolen, you may be less likely to recover it. In addition, credit issuers monitor transactions and can flag something that seems suspicious and alert you, which could help you avoid fraudulent purchases in the first place.

Reasons not to get a credit card

Despite all the advantages of having a credit card, there are factors that might make you decide not to get one. 

Credit cards can hurt your credit if not used responsibly

Credit card users have the potential to accumulate too much debt if they don’t manage their accounts responsibly. If you incur too much debt or make late payments, your credit score can potentially decrease. This isn’t a risk that you take when using cash and debit cards. When you use cash, you’re unable to spend the money that you don’t have with you. But with credit cards, it can be easier to charge more than you’re comfortable repaying. If you’re not good at managing your finances, you may want to consider starting with a more manageable option, like a secured card.

Credit card fees can outweigh the benefits

Credit card accounts may come with fees and interest payments. For example, you may be charged a late fee if you fail to make the minimum payment required by the due date. According to OCC, if you use your card to get cash, your credit card issuer will typically charge a cash advance fee greater than what you might pay when using a debit card to access cash. You may also be charged interest according to the account’s cash advance APR. While Discover has no annual fee on any of our cards, some cards charge an annual fee that may cost more than the rewards you earn. If you carry a balance month-over-month, you may pay interest on your outstanding balance. 

Bottom line

Many people find that the rewards and benefits of cards outweigh the costs and risks. Ultimately, credit cards aren’t always the best form of payment for everyone or every purchase, but they can be valuable financial tools when used responsibly. By understanding how a credit card differs from other forms of payment, you can make the right choice for your needs.

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