Do you need a credit card to build good credit?

Find out the pros and cons of having a credit card, plus ways to establish credit without one.

According to a recent Bankrate survey, six out of 10 people in their 20s don't have a credit card. Credit: Thinkstock According to a recent Bankrate survey, six out of 10 people in their 20s don't have a credit card.
Credit: Thinkstock

 

A new survey conducted by Bankratefound that 63 perfect of Americans in their 20s don't have a credit card and only 35 percent of people over 30 have one. With so many cautionary tales about credit card debt yet much talk about the importance of establishing a good credit score, millennials are getting mixed messages.

 

 

Credit cards aren't for everyone. If you are responsible, a good planner and have the ability to meet more than the minimum balance of your card each month, credit cards are a good tool for building credit. But if you are using credit cards to buy things you are uncertain you can actually afford, are an impulse buyer or have a history of missing payment due deadlines, it's better not to have one at all.

 

When used correctly, having a credit card has many benefits, according to Business Insider. If you need to buy something the day before you get paid, you can use your credit card without worrying and then you can just pay it off at the end of the month with your paycheck money. It also comes in handy when you want to rent a car or book a hotel room as some places do not accept debit cards in fear of theft; credit cards offer more security.

If you are planning to buy a home or a car, a credit card can help you establish the good credit score you will need to do so. But if you do not think having a credit card is the best decision for you, there are other ways to build credit. Having a couple bank accounts that you regularly use and paying your monthly bills on time all contribute to establishing good credit. This can include student loans, utilities bills, rent, cell phone bills and anything else that requires a regular payment due on time.

The key to establishing good credit is to act responsibly, in whatever ways best fits your personality and lifestyle.

Follow Emily on Twitter: @EmLaurence

 
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