Debt Management & Credit Repair DIY

Credit Cards – Do I Need Them?
Thursday, June 02, 2022 | 10:34am

Ask people about credit cards and you will get a wide array of responses from very positive to quite negative, depending on the person you’re asking.

With so many different opinions, how do you decide if a credit card is right for you? The first step is making the decision for yourself. You are the only one who knows if you can responsibly use a credit card and keep up with the payments or not. Would you be able to use it wisely or would it end up being a source of trouble? Only you can answer that question.

Here are some pros and cons, and other items to consider that might help you with the decision.


  • You can build credit history.
  • You may have additional purchase and fraud protection, or extended warranties on your purchases.
  • You may be able to earn rewards.
  • Easier booking of rental cars, hotel rooms, etc.
  • They can be used for unexpected or emergency circumstances.
  • You may get additional discounts on certain products or services.
  • Added convenience.


  • You can harm your credit history by maintaining high balances, making slow payments, or opening new accounts.
  • They can lead to overspending or spending money you do not have.
  • You may have to pay additional fees to use them at some locations.
  • You may become overly dependent on them and fail to do things like establish an emergency fund or maintain a budget.

When choosing a card, these are some of the terms of their agreement you should consider:

The interest rate. Cards can vary from 10% to 28% or more, with the average range being 15% to 18%. Also, is it a fixed or variable rate? If variable, how are rate changes calculated and how often may they occur? Your goal should be to pay off the balance each month so the interest rate would have no effect, but in the event you cannot a higher rate could make it more challenging to get the balance back to zero.

The annual fee. While many cards have moved away from an annual fee there are still several that assess one, especially some of the rewards cards. Ask yourself does the benefits of this card make it worth the annual fee being assessed?

The payment terms. Card payment plans could be anything from the whole balance being due and payable each month to as little as 2% of the balance. As mentioned under the interest rate above, your goal should be to pay the balance monthly, but if you are unable, be sure you know what to expect regarding payment.

Other fees may be assessed and how are they calculated? This would be things like over the limit fees, late charges, etc. Also, if you are late many cards will increase your interest rate, often to the maximum rate allowed by law.

If rewards are offered, what are they, how are they calculated and when are they available?

Things about yourself to consider:

Am I an impulsive person? Would I see something I want and buy it just because I had the credit card, even if it did not fit my established budget?

Am I a risk taker? Would I let the credit card replace my emergency fund?

Do I need the credit card? If not, don’t feel forced into getting it.

If I had to use it for an emergency, do I have the willpower and financial ability to do whatever it takes to get it paid off again quickly?

Credit cards can be a helpful convenience or make your life complicated. When you are evaluating whether to obtain a credit card, be honest with yourself when determining if you can handle it. Put your own limits on the usage. Some surveys indicate you purchase 8-10% more when using a credit card in comparison to what you would spend paying cash. Be prepared to manage those impulses to splurge, and make sure you are the one setting the limits and maintaining control.

The Tennessee Department of Commerce & Insurance’s (TDCI) Division of Regulatory Boards oversees the licensure of credit and debt collection professionals through the Collection Service Board, Debt Management Program and the Credit Services Business registration program.