According to the Federal Reserve Bank of Atlanta (PDF link), 82% of U.S. citizens over 18 years old have at least one credit card. However, that still means almost 20% of the population does not.
Credit cards are an integral component of personal finance. With proper use, credit cards can be a tool for your finances and an inexpensive (if not free) source of funds when you need them. So, why do so many people not have one?
Here are four excuses you may have used to avoid applying for a credit card. We’ll show you why you should take the plunge and start using the credit you’re entitled to.
Related: Why nearly every purchase should be on a credit card
‘I don’t trust myself’
It’s OK if you don’t trust yourself to be prudent with a credit card, but that’s still an excuse. Did you trust yourself to stay upright when you first learned to ride a bike? Like anything, getting comfortable with credit cards takes time and practice.
That doesn’t mean you should abandon caution. Credit card misuse can result in heavy costs, such as late fees and interest. Managing this form of debt requires the right mindset and self-regulation, such as always paying your last statement balance or setting personal spending limits each month.
If you’re worried about overspending, ease into it. Keep the training wheels on. Try using a credit card for only one type of expense (like groceries). Over time, you’ll build trust in yourself and develop the right spending habits.
Related: 6 simple rules to stay out of credit card debt
‘I don’t see the point’
Credit cards are a convenient, secure source of short-term debt. Plus, most major credit card companies offer incentives via rewards programs, such as cash back and airline miles.
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Credit cards also build your credit. If you plan to finance bigger purchases (a house, a car, etc.) with long-term debt, proper use of a credit card will increase your chances of receiving favorable loans down the road.
So, even if you don’t care about the perks, you should at least use a credit card to enhance your credit score.
Related: What is a good credit score?
‘I don’t need one’
You’re right. You don’t need a credit card — at least, not like you need nourishment or sleep. But if you want to maximize your cash flow, earn rewards for your day-to-day expenses and improve your credit score, you need a credit card.
How does a credit card maximize your cash flow? When you buy with credit, you have the cash when you need it, but you’re not actually paying for it until later. Meanwhile, if you use cash or a debit card, that purchase comes straight out of your wallet or checking account.
As long as you’re spending within your buying power and repaying your borrowings, you can reap the benefits of credit cards without the risk.
Related: Credit vs. debit cards: Which is the smarter choice?
‘My credit score doesn’t matter’
Your credit score matters.
It affects your ability to get loans and get favorable terms (like a mortgage with a low interest rate). It can also factor into your chances of getting a job or renting an apartment. According to a CareerBuilder survey, 72% of employers run background checks on potential new hires; of those background checks, about 29% include a credit check. They won’t see your score, but they can see a modified credit report that displays your payment history and debt.
If you look for housing, landlords will run credit checks before renting you their real estate. If you have a rough-looking credit history (or none at all), they might not even consider you.
To build credit, practice consistent and prudent credit card management (i.e., paying on time and utilizing less than 30% of the credit available to you). With time (because how long you’ve had credit matters, too), you will boost your score.
Related: How do credit scores work?
Bottom line
You can rationalize anything, including not having a credit card. Yet a credit card can be a worthy short-term and long-term financial instrument for you. If you’ve been putting off getting a credit card or you’re new to the world of credit cards, consider these factors.
Related: Getting started with points, miles and credit cards to travel
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