Is Credit Card a Good Idea?

Your bank would often try to convince you that you need a credit card in order to build your credit history and especially if you are starting afresh. It would try to convince you that with a secured or unsecured credit card, you could gradually build a good credit history and would highlight all the benefits that the card offers. But is having a credit card the only way to build a credit history, or is it the convenience of not having to carry a lot of cash?

Actually, the credit card is not the best medium for either of the two. Studies show that credit cards make you spend more than you ideally would if you did not have the option of credit. With regular use it takes away the habit of sound money management and savings. If convenience is what you are looking for, then use a debit card. A debit card helps you build a good credit history as much as anything else and does not have the evils that come with a credit card.

There are situations where one cannot avoid the usage of a credit card. Remember the following rules and a credit card should be less of a pain for you:

• Look at several options across different banks before getting a credit card
• Don't go for a higher limit at the cost of a higher APR
• Keep the credit card as a backup for emergencies
• Use cash or your debit card for small purchases
• Avoid using balance transfers
• Avoid getting an add on
• Always check your statement thoroughly for any surcharges
  
• Mark your monthly due date on a calender. Always make the payment 4-5 days before the due date
• Push the bank for a zero APR whenever you can
• Check your credit rating and history with any one of the registered credit rating agencies at least once every 6 months. They do not charge you for the information.