I’ve had this argument with my girlfriend a couple of times but I wanna run it by ya’ll as well.
So I have been poor/barely an adult for my life (FTR I’m 28) and have never had money, and I still don’t. I have a job that pays low/decent enough for me to survive…but not enough for me to not put money on a credit card. I have one credit card through my bank and I use it for 99.9% of my purchases because I have a pretty high limit. I always pay part of it off per month, I’m never late, and I’m not in danger of maxing it out/getting into trouble.
So because of this or maybe just because she discovered it, my girlfriend is wanting me to get another credit card that has some airline points associated with it. I keep saying “no” because in my mind, I don’t make enough money to merit having a second credit card. I don’t like the concept of credit cards in the first place because I’m uncomfortable spending money that I don’t have. I do it now out of necessity, but up until now I’ve never had a CC and I only wanted one for emergencies.
The crux of her argument is that you NEED to have more than one credit card open because you need to have multiple lines of credit open for…some reason. I don’t completely believe her because I have a car loan (and probably always will in some form or fashion), I have my student loans right now, and my credit card now. She keeps saying that I need to have multiple lines of credit open even if I don’t use it, but I’m still skeptical.
All of that being said, she is much smarter, wiser, and has more life experience than I do…so I have no doubts that at the end of the day she is right. But I wanted to get other opinions
People worship the FICO score more than is necessary these days. Some will tell you to get one to build credit, but far more people screw up their credit with cards than build it up. If you have student loans or a car purchase, they’ll go a lot farther than a credit card, anyway.
A second credit card is just one more bill to remember you need to have to pay. You always remember to pay the one you’ve got, and it’s got more than enough room under its credit limit for your needs, so why fuck with a system that works?
If you are getting a card so you can spend more then that would set off some red flags. Airline mile cards, unless you spend a lot of money, are useless to you. Any miles you earn will expire before you have enough to use them.
The best deals are on cards with no annual fee that give cash back. Otherwise stick with the one card you have.
This. However, if you are dependent on using a credit card for normal daily life, you might be wise to get a second credit card and leave it in your drawer at home. That way if your first card gets lost/stolen/compromised, and it’s a few days before the bank can get a replacement into your hands, you’ll have a backup card to carry you across that gap.
I got rid of all my credit cards about 8 years ago. My car has been paid off for about a year now and all I really owe is the mortgage.
I always heard “oh, you better have a credit card or two. And make sure you use them even if you pay them off every month. It’s important to your credit score. If you have available credit and don’t use it your score will go down.”
I pretty much blew off the advice.
And I just so happen to have checked my score yesterday and it was 840. So apparently having and using a credit card really isn’t that important.
This. Especially if you travel - having a backup card is a necessity then. Just make sure to put one or two charges on the backup card each year, to ensure the bank doesn’t close the card on account of nonusage.
I am with your girlfriend. I think you are looking at credit in a strange way too. Credit is more tied to trustworthiness than to your income. I don’t think it’s instructive to view yourself as “too poor” for a 2nd credit card. If you can handle more credit cards without going into debt, there is no reason NOT to have them. I get several hundred in cash back every year just from using my Amex. Not having a similar card is basically agreeing to pay more for all your purchases in order to subsidize people like me. Many cards also give you perks like first pick of concert tickets, free credit reports/scores, and spending trackers and accounting software. There also benefit of being protected in case of fraud in ways that many bank credit/debit cards don’t offer.
Presumably, you will not always be poor or have student loans. Having a long credit history is important for many reasons. Even if it’s just a matter of having the card locked in a safe. No, not having one won’t be the end of the world, but it will likely mean you are paying more for a variety of things small (groceries) and large (home mortgage).
First, in your situation I would advise against a second card. There is nothing you can do with two that you can’t do with one. Someone with a higher income might be able to justify having an AmEx and a Visa for different types of benefits (concierge service, travel insurance, etc.), but those benefits are not going to be as evident if you are just making enough money to survive. I think your girlfriend is overestimating the value of having another card to establish credit.
Your argument makes a good case to have a credit card but it makes no case at all for having more than one. He is already allowing debt to accumulate if he “always pay[s] part of it off per month,” emphasis on “part.” No need to exacerbate that.
Like I said, emphasis on “part.” If you are not paying all of it off every month, then you are borrowing money every month to cover your expenses. Regardless of how much you make, it’s not a good thing to spend more than you make. glee is right–using a credit card as a way to borrow money is pretty damn expensive. Look at the “interest” line of your credit card statements for the last year and add up how much you have stolen from yourself by spending just a little faster than you make it.
I am not a financial advisor but I have had a few and every one of them says, “Do not borrow money to consume.”
A second card is particularly important for international travel. IF your main card gets eaten by a machine or suspended by your bank for suspicious charges or lost or stolen or compromised, you still have access to funds.
If you need one card (because you’ve arranged your finances to depend on it, you need a second one as a backup in case something goes wrong. You might even suddenly need more than one card’s cash limit, or more than one-day’s ATM limit. It’s no big deal, just get the card and put it away and don’t use it. Who would say “I only need one car key”?
If you can be responsible enough to put a single small recurring bill (a phone bill is great for this) on a second card, and pay it off ENTIRELY every month, then it’s useful to have a second card for emergency use in case of fraud, theft, or all shit breaking loose in your personal life.
Otherwise, no, you don’t need other cards, and if you are broke enough that you can’t live off your current paycheck without using credit, you need to be really careful - glee and CookingWithGas are right on the money about compounding interest and getting yourself into deep waters by not paying that first card off entirely.
I know those waters, I’m slowly paddling my way back out of them myself after a really shitty expensive spring and summer. However, I’ve got a plan and a goal in mind to pay them off, and I can afford to do so - if you can’t pay your card down and still make your living expenses, then that is a real financial problem, regardless of what your credit limit is.
Car keys don’t enable you to go further into debt. He’s already accumulating on his existing card, which is scary enough as it is. A second one could be disastrous.
Yes, in the OP’s situation it’s probably not a good idea. But for myself twice within the last six months I’ve been glad to have a spare credit card. Once when my wallet was stolen and once when the card was cancelled because of fraudulent charges.
One of my cards has been repeatedly spoofed (and Target etc. hacked), so I’ve had to update it pretty consistently every couple of years. For this reason, I have a back-up card that I never use domestically except in emergencies. I take it along when I’m traveling, kept somewhere separate from the main card.
Does your girlfriend care more about our credit rating or getting airline miles? If the former, it doesn’t really matter, as others have said. If the latter, you could look for a new card with a low annual rate that could serve as your new general use card, and you could hold your current card for emergencies.
True for some of them, but really not what my experience has been, especially if the OP is using the card for most expenses and paying it down or off every month. In fact, this was the only way I could afford to travel when my income was low and my student loans were high. I pay just about everything on my travel miles card, and I’ve been all over the world with frequent traveler tickets. They don’t necessarily expire, either. I’ve had several frequent traveler cards over the years and have found the Alaska and Delta plans most versatile. YMMV depending on who serves your air hub. The United mileage plan bites but you can check a piece of luggage free with the card, at least.
At your economic level, you should have a no annual fee card and pay it off every month. What is the interest rate on the card you’ve got? Usually the rates are pretty high. Not quite Payday Loan rates, but high. If I had a balance due on a card I would quit using it until I got it paid down to zero. I have had only one card all my adult life. My credit rating is excellent. I have never had any need of a second card. Is it absolutely necessary to use your card every month? And you can’t pay it down to zero at the end of the month? You are living above your means.
More than a decade ago my wife and I decide to streamline everything and canceled all our credit cards except for a Visa from our credit union (no annual fee, low interest rate.) We’ve used that, a debit card and a checkbook for any non-cash purchases ever since.
BTW, we just bought a new car, and both our credit scores are 700+, so I guess we have enough multiple lines of credit.
In terms of concern about a credit card being lost you can your debit card from your bank (almost all are associated with Visa or Mastercard now) if that happens.
Currently I have two credit cards (one for business and one for personal) and have it set up so both are paid automatically in full by their bank autopay options. They both are 1% cash rebate cards.
I had a couple of ifs in my post. If the guy can’t handle his money responsibly, maybe he shouldn’t have car keys, either, because he is probably also making unaffordable car payments, enabling him to go further into debt.
I made it a point to say “if you need one card”. That does not necessarily mean exactly the same as “If you need to be using credit to get from payday to payday and can’t pay off the balance”. And, I said “don’t use it”