Can anyone get through life without credit? Of course! In theory, it would be the best way to live because it means that you are living within your means. That you are only spending the money that you actually have and when you actually have it. With proper budget management, one can live within his salary.
The only reason why people think that they can’t live without credit is that the money almost all Americans own makes it so easy to shop; hence, people overspend all the time. Not only that, people start to spend beyond their means. According to reports, almost all Americans who own a credit card have a balance in their bill every month.
But now that it has been established that a person can actually go through life without a credit, is it wise? Not necessarily. While credit cards may be considered the root of some evils, being with credit actually carries some advantages. Here are some reasons why a person will need credit to go through life:
Buying a house
Unless you are loaded enough to buy a house in cash, having a good credit standing is actually one of the things financial companies look for when you take out a mortgage. The company needs an assurance that you are a good creditor and you pay on time. Having a high credit score spells the difference between getting the loan or not.
Rewards & cash backs
Credit card companies are fond of giving away rewards, rebates and sometimes some cash-back promos. All you have to do is use the credit card—the more you use it, the more chances of getting a reward or rebate. Sometimes, the return is actually quite worth it.
Renting a car
Just in case you find yourself in a different state and you would like to drive around, the option would be to rent a car. However, you can’t rent a car without a credit card anymore. The credit card just seems to be a more secure identification.
It’s ironic how a credit card can actually protect you when it is the very reason you are spending more. Credit cards give you the illusion that you have money when every swipe is actually a debt unless you pay for the accrued expenses before the month is up. If your credit card is stolen, or at least if the information in your credit card is stolen, you will be protected under the Truth in Lending Act. This means that whatever fraudulent activities done with your credit card could not be blamed on you. The same could not be said with check and debit card payments.
Another example about the importance of credit cards is the loss. When you lose your credit card, it can be canceled and replaced. But a lost cash is gone forever.
There are some cases wherein you have absolutely no money—but when you have a credit card, it’s as if you have money to spend. So in emergency cases, it helps to have a credit card.