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4 reasons why you need a credit card

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Whether you’re 18 and just starting to hear about credit cards or you’re 45 and have never thought about the benefits of cards, it’s important to start building credit.

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Credit cards have many advantages. They allow cardholders to take control of their finances and learn valuable money management skills. They also offer fraud protection and monetary benefits to users and allow them to repair or improve their credit ratings for future purchases.

According to a recent survey conducted by GOBankingRates, 16% of Americans do not own a credit card. So one in six Americans don’t have to worry about credit card fees, but they also miss out on the many benefits of opening cards.

Here is more information about this study and why it is important to open a credit card as soon as possible.

16% of Americans do not have credit cards

Of those without a credit card, the majority are between the ages of 45 and 54 — 22% of respondents fall into this category. Additionally, 19% of Americans between the ages of 25 and 34 are also more likely to not be responsible for credit card bills. Additionally, women (18%) are more likely than men (11%) not to have a credit card.

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Moreover, among Americans who have credit cards, many have more than one. While the largest proportion of Americans have a credit card, with 28% of respondents falling into this category, the survey found that 25% of Americans have two credit cards, 15% have three, 8% have four and 9% have more than four. .

Now that we have a better understanding of the number of Americans who have credit cards versus those who don’t, let’s look at some of the reasons to consider opening a card.

Education: A credit card can help teach debt management

Opening a credit card not only brings rewards and benefits, it also teaches the user valuable life skills and teaches the person how to stay on top of their finances.

“If you avoid credit altogether, you risk making bigger mistakes when you’re forced to start later due to a cash flow crisis,” said Nicole Strbich, CFP and director of financial planning at Buckingham Councillors. “To avoid this, start with small credit limits and only charge certain expenses, like gas or recurring monthly bills.”

Positive credit history: it is important to establish a credit history

Consider opening a credit card to build up credit for future investments. The minimum age to open a credit card differs; but, in general, most cardholders must be 18 or 21 to open an account. While young Americans may not think about buying a house or a new car, it’s important to get a head start on your financial journey so you can prepare for these expenses later.

“Without a credit card or other loans, it can be impossible to build a credit history so you can buy a house or a car,” Strbich said. “Unfortunately, this story has to be started many years before when you might want to try and qualify for a loan; and, if you don’t take the lead, you may not have many options.

According to our survey, the majority of Americans open credit cards to build credit — 22% of survey respondents use them primarily for this reason.

Pros: Credit cards offer rewards to users

Remember that opening a credit card is not just about opening a new bank account, it allows you to accumulate advantages and advantages that you will not be able to enjoy by using a debit card.

“Select a credit card that offers rewards that fit your spending and your lifestyle,” Strbich said. “Using a credit card for purchases and paying it off each month can generate rewards that can be used against your balance or sent to your bank account.”

According to the GOBankingRates survey, 15% of credit card users use their credit cards primarily for rewards and benefits.

Credit cards offer protection against fraud

Protect yourself against credit card fraud and make sure you can get your money back by opening one of these cards.

“If someone steals your card information and makes fraudulent transactions, you can report it to your credit card company and they will credit your statement for the transaction,” Strbich said. “And, in many cases, the credit card can alert you to suspicious activity before approving the transaction.

“With a debit card, you have less protection against fraud and less time to report activity to limit your potential liability. I suggest customers avoid debit cards for this reason.

Methodology: GOBankingRates surveyed 1,003 Americans ages 18 and older across the country between September 19 and September 20, 2022, asking 12 questions: (1) Which of the following is most important to you when it comes to is choosing a new credit card?; (2) How do you manage your credit card bill each month? ; (3) Do you know your credit score? ; (4) At what age did you receive your first credit card? ; (5) For what main purpose do you use your credit card(s)? ; (6) Do any of the following statements apply to you? (Select all that relate to it); (7) Which credit card fees do you hate the most? ; (8) How many credit cards do you have? ; (9) What is your current total debt on your credit card? ; (10) How long do you think it will take to pay off your credit card debt? ; (11) Have you already reached the credit limit of your credit card? ; and (12) Have you ever charged any of the following to your credit card? Select everything related to it. GOBankingRates used PureSpectrum’s survey platform to conduct the survey.

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This article originally appeared on GOBankingRates.com: 4 reasons why you need a credit card