Dear Lifehacker, I am 18 and don't have a credit card. I have no need for one, although my bank keeps suggesting I use one. Is there really any point with Visa debit cards and PayPal? I am scared of getting a credit card as I am currently not in a bad financial situation and don't want that to change. And why do some people have several credit cards? Cheers, Card Resistor
Don't listen to your bank. Ever.
Seriously though, you should never base your credit card decisions on what a financial institution tells you — their whole business model is based on lending money and charging interest to maximise their own profits. Often, this leads to mounting debts that the customer cannot hope to pay off, resulting in a perpetual cycle of minimum monthly repayments. This isn't just the bank's fault — personal accountability also plays a part — but you'd be wise to view "incredible" credit card offers with a huge grain of salt.
With that said, credit cards do have their uses. You'll occasionally run into situations where it pays to own one — for example, some hotels won't process debit-only cards or require a larger security holding deposit (these also takes longer to be refunded into your savings account). They can also prove handy when travelling abroad; especially if you're relying on foreign ATM machines for cash. You do occasionally find online retailers who don't accept PayPal, although this is becoming increasingly rare.
People carry multiple credit cards for numerous reasons. Historically, some regions had far more of one card type than the other, so having both Visa and Mastercard was useful if you were frequently away on business. Owning more than one card also allows you to use different them for specific purposes, such as online shopping or as a backup for when your primary card is lost or stolen. Of course, there are also plenty of people who apply for lots of credit cards due to poor financial planning; they like having more money at their disposal without fully considering of the consequences.
So do you need one? Basically, if you haven't encountered the need for one, we wouldn't rush into it. Your best bet is probably a sub-$10,000 card with no annual fee that's only kept for emergencies. You can find plenty of advice on the best credit cards via our ratehacker tag.
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