Credit Card FAQ

Why do I need a credit card?

While a credit card may have risks or downsides, these are vastly outweighed by its benefits. The primary purpose of a credit card is to provide you with credit. This means that you can buy something today, but not have to pay for it until later, thus borrowing money from the credit card issuer. One of the best aspects of most credit cards is that if you pay your bills on time and in full, you are able to borrow this money with no interest, effectively receiving a free loan. You only have to pay interest if you do not pay your bill in full by the due date. In this case, you do have to pay interest, and often at a fairly high interest rate, although this may often be the cheapest and/or the only way for many people to borrow money. Current interest rates, or APRs, on credit cards are anywhere from around 10% to over 20%, although they can be as low as 0% for promotional periods. In addition to borrowing, there are many other reasons why having a credit card is valuable. It is important to establish a credit history, since in many cases, having no credit can be as detrimental as having bad credit. Even if you do not use your credit card often, it can be crucial in certain situations, such as emergencies, when making hotel or restaurant reservations, or when shopping online. A credit card is more secure than a debit card, since you can dispute charges before paying them.

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