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Should you have a credit card?

manage your money May 14, 2020

I recently taught a live budgeting masterclass, and one of the participants asked a really good question during our Q&A time:

Should I have a credit card?

Much of the conversation around credit cards can feel overwhelming and even a little controversial. Some people love them and have several with various perks/discounts and others believe they’re not at all helpful to have and it can be tough to figure out what’s right for you.

If you’re trying to do just that, I recommend asking yourself this question:

Would having a credit card tempt me to buy things I technically don’t have the money to pay for right now?

If the answer is yes, stick with your debit card and/or cash and don’t get a credit card. Going into credit card debt is never wise—and paying off the debt is pricey, because you accrue interest (at a very high rate) on whatever you don’t pay off in full each month and this interest adds up quickly.

If the answer is no, go ahead and apply for a credit card.  It's convenient, and if you use it regularly and pay it off in full and on time each month, you can strengthen your credit score.

(This score is used by banks to figure out how much money to lend you for a house or car, for example, and can be used by landlords to figure out whether you’ll pay your rent on time each month, therefore increasing your chances that your lease application will be accepted).

In addition, many credit cards have “rewards” – after spending a certain amount of money, they often offer cash back or “points” towards hotels, flights, and other travel expenses and these can be super helpful. (I’ve used my cash back for new clothes, Christmas presents, plane flights to Chicago, etc.!)

If you think that having a credit card is the right choice for you, here are a few tips to help you choose the right one and pay it off in full every single month.

Tip 1: Apply for just one credit card (multiple cards can be hard to keep track of) with no annual fee. Many large banks (Bank of America, Wells Fargo) have good credit cards with decent cash back options. They’re easy to use and easy to pay off.

If you want a card focused more on travel rewards, try the Chase Travel Card – there is an annual fee of $95, but it can be worth it if you plan on traveling a lot once we’re allowed to do so again. [Note: I do get bonus points from Chase if you sign up with my link - but it's no cost to you at all. I just want to be transparent with you!]

Tip 2: Have a budget for each month so you don’t accidentally spend more money than you have and end up in credit card debt.

If you don’t have a budget, no worries! I can show you how to build one from scratch in less time than it takes to watch the Bachelorette. Just click here.

Tip 3: Put a reoccurring reminder on your phone for at least 5 days before your credit card is due. (Paying on time helps boost your credit score, and late payment fees are often very high so you want to do everything you can do avoid them).

When you get the reminder, log on to the credit card’s website and pay the bill in full. Do not pay the minimum – this will incur interest charges on the remainder and you don’t want those (they're expensive!)

Tip 4: Once a year, ask your credit card company to raise your credit limit—this helps raise your credit score. Continue to stick to your budget though – this isn’t an excuse to spend more than you make, even if your credit card company likes to tell you it is!


As always, I’m happy to answer any questions you have—email me anytime at [email protected] or come on over to Instagram and DM me to say hello (@katie.haahr).


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