What Happens If You Never Have a Credit Card?

counting cash
Yulia Grigoryeva / Shutterstock.com

Some people may choose to abstain from opening a credit card for various reasons. Maybe they don’t trust themselves to not overspend or perhaps they have a fear of going into debt. But how does this decision play into your overall financial health?

Find Out: GOBankingRates’ Best Credit Cards for Travel, Rewards & More
Learn: The Top Purchases You Should Always Make With a Credit Card

Here’s a look at the possible pros and cons of never having a credit card.

Why Not Having a Credit Card Might Be a Good Idea

For certain people, not having a credit card is a responsible choice.

Read More: The Quickest Ways To Pay Off Your Credit Card Debt

“I have observed that most of these people don’t know how to use credit cards responsibly,” said Lyle David Solomon, principal attorney at Oak View Law Group, which helps people become debt-free. “They fall prey to the debt trap and start growing a misconception that using credit cards is bad for their financial health. My advice is if you splurge and don’t follow a budget, taking out credit cards is not your cup of tea.”

Why Not Having a Credit Card Might Be a Bad Idea

Earn More Perks From Your Credit Card

Not having a credit card will make it harder to build up your credit score, which can affect you as you try to reach other major financial milestones.

See: Why It’s Still Better To Use Your Credit Card Over Your Debit Card

“In the future, if you plan to take out an auto loan or a mortgage, you need to have a decent credit score,” Solomon said. “Otherwise, your loan application may be rejected.”

It can also make it harder for you to get approved for a rental property.

Check Out: 90-Second Moves To Raise Your Credit Score 200 Points

“Landlords often check the credit scores of tenants to find the best candidate for renting their property. So, if you are going to rent a house, your landlord may check your credit score,” Solomon said.

Another negative is that you won’t earn rewards and cash back on purchases, which can end up costing you more in the long run (assuming you use credit cards responsibly). Plus, if you only use debit cards, you don’t get the same level of fraud protection as you do with credit cards, Forbes reported.

See: What Happens When You Get Denied for a Credit Card — And What To Do Next

Earn More Perks From Your Credit Card

A final downside is that pending transactions — such as those charged by hotels and rental car companies — can tie up funds that you need when you pay with a debit card. Because credit card limits tend to be higher than what you have in your checking account, this is rarely an issue when you pay with credit.

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About the Author

Gabrielle joined GOBankingRates in 2017 and brings with her a decade of experience in the journalism industry. Before joining the team, she was a staff writer-reporter for People Magazine and People.com. Her work has also appeared on E! Online, Us Weekly, Patch, Sweety High and Discover Los Angeles, and she has been featured on “Good Morning America” as a celebrity news expert. 

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