<p>My oldest son is moving out of the house and across the country, for his first full time job. He believes that he doesn’t need a credit card, and can use his ATM and cash for everything. That concept is foreign to me, as I put everything on my credit cards and rarely carry cash. Never use my ATM card unless I have to. I think we have 12-13 credit cards right now, we pay them all off monthly (except the 0-1.99% interest ones), as we are constantly signing up for new cards to get the sign up bonuses. We get thousands of dollars worth of airline miles and checks on a yearly basis for sign up bonuses, and I have no idea why they keep offering us these. Thank you pointsguy!</p>
<p>Anyways, I’m rather hesitant to insist that my son get a credit card. He isn’t the type to go into debt, and is very frugal. Yet I think he needs to have something in his wallet as a backup to the ATM card, and while he has a few credit cards from our accounts, I’d really like him to be financially independent, though we could easily transfer money from his bank account to ours if he used our card. His income should be enough to provide for him, and I’m not afraid of him running up a card, so those aren’t issues.</p>
<p>What do you guys think? Could you get by without a credit card?</p>
<p>It may be hard to book an airline ticket or buy other things on-line without a Visa or Mastercard.</p>
<p>While you can get a Visa or Mastercard in a debit card (indeed, a lot of banks push this by giving you a Visa or Mastercard ATM/debit card unless you tell them you want an ATM/PIN-debit only card), that is less desirable than having a Visa or Mastercard credit card when the inevitable fraud hits. Fraud on a credit card runs up charges that you eventually won’t have to pay, while fraud on a debit card empties out your account (possibly causing your checks to bounce) while the bank is investigating the fraud.</p>
<p>Having a credit card that is used every month and paid in full every month will cost nothing, but run up a good credit record that may be useful if he decides to buy a house. In some states, insurance companies include credit history in insurance rate determination. Some jobs also check credit history.</p>
<p>We are big proponents of credit cards - providing they are paid off in full each month. Both of our kids have them and they pay them in full. I like that I don’t have to carry a lot of cash. And it is always good to have in an emergency. </p>
<p>I admire the fact that your son pays cash for everything, but it is also important to establish a good credit record. </p>
<p>I would think he would want one at least for emergencies. But I guess that is his choice.</p>
<p>Niether of my Ds has ever had a credit card. One has been out of college for 2+ years, the other out for several months. Both have full-time jobs and have managed to pay for everything without a credit card.</p>
<p>These are some good arguments. I don’t think he’ll object too much if I push it, I just want some ammunition. I found a credit card with a 40K point sign up bonus (which means they will send you a $400 check), which actually would be enough of an argument for me. Why turn down free money? I doubt he cares about that, unfortunately.</p>
<p>I think I’m going to copy and paste your ideas to give to him.</p>
<p>I mainly got a credit card for the cash back. I get a $50 check every other month or so-- who says no to that? I prefer to use it because there is better protection against fraud. I have a visa debit/credit card that I could use, but it has a $400 daily limit or something that is annoying if I am making bigger purchases. I think I could get that taken off but I’ve never bothered to try, I use the credit card almost exclusively. I pay my card off every month and always have, but I like the idea that if a crisis were to hit I could stop using it and let those charges “float” for a month if critically necessary. I take steps so it wouldn’t be necessary, but it’s still peace of mind sometimes. I think I could live exclusively off my debit card, I have for the last two months as I am waiting for fiance to get off his behind and activate our new card to use instead, but I wouldn’t choose to.</p>
<p>The fraud issue should be a big deal for him. My fiance’s identity was stolen a couple of years ago and it took an entire year to sort out and was a complete nightmare, and it is something we will always live with probably to some degree. It almost kept us from being able to buy our house. The credit cards were just about the only thing that WEREN’T a huge headache.</p>
<p>If his card is just a debit card, and not a debit/credit card, he might want to at least get a debit/credit card so can run the card as credit and not go around flashing his PIN to anybody who might be looking over his shoulder. Not sure if they still have exclusively debit cards, but that was part of why I started using my credit card instead of my debit.</p>
<p>“The fraud issue should be a big deal for him. My fiance’s identity was stolen a couple of years ago and it took an entire year to sort out and was a complete nightmare, and it is something we will always live with probably to some degree. It almost kept us from being able to buy our house. The credit cards were just about the only thing that WEREN’T a huge headache.”</p>
<p>“Fraud on a credit card runs up charges that you eventually won’t have to pay, while fraud on a debit card empties out your account (possibly causing your checks to bounce) while the bank is investigating the fraud.”</p>
<p>That actually sounds like the best argument to always use a credit card if you can. It sounds like with a debit card, if they figure out your PIN, they can clean you out. With a credit card, you can dispute the charge, and be liable for either zero or a small amount. Enough reason to never, ever use a debit card when you could use a credit card.</p>
<p>I seem to remember there is some kind of hassle with paying for a hotel room with a debit card – maybe they put some kind of hold on your account (a few hundred dollars) that does not come off right away? </p>
<p>I only have two credit cards – I don’t like to deal with keeping track of a lot of accounts and having to make the payments on time no matter how many points/rewards I get! Your son sounds like he is in this camp of “too much hassle”, at least to have a lot of cards. So I wouldn’t keep pushing that angle for now (he may figure it out on his own).</p>
<p>Both of my cards are no fee Visas. The one I use primarily earns me points at a hotel chain I use a lot. I put everything on the card and pay it off on time every month. The other I keep stored in a file, take it out and charge something once a year and put it back. If the primary card is lost or stolen, it can take a couple of weeks for the backup card to arrive. So the “card in the drawer” is to be taken out as a backup if that happens (have done this twice in the past six years). I have a pretty high credit limit on both, so I suppose in a true financial emergency of the type I really don’t want to think about, I would have access to that credit if necessary. One of the times when I used it was to pay some large funeral expenses for a sibling that went beyond my first card’s limit – I was reimbursed after the fact, but it helped out in a crunch. The backup card does not earn any points, it is just a no fee card my bank offered me that I took.</p>
<p>I think having a card or two over the long term is good for your credit rating if you are not late with payments. This could pay off with lower interest rates on loans in the future (mortgage).</p>
<p>My D1 (now 23, out of college) has one credit card, I think. Offered by our bank when she was a senior, no fee. She took it to start building her credit rating and has just kept it. </p>
<p>If your kid does not use the online bill payment function from his bank, now would be a good time to start (my very computer literate children seem to be having a hard time building this habit, which is amazing to me…). Then it is easy to schedule the card payment as soon as the bill arrives.</p>
<p>Another reason to have a credit card is car rentals and hotel reservations. Car rental shops will either not accept or require huge cash deposits before giving you the keys. You do not have creditworthiness in their eyes. Likewise some hotel chains require a cash deposit if you do not have a credit card to make a reservation. If you keep low balances buying gas at the pump can tap you out given automatic holds that don’t expire for a few days. Definitely get a credit card and pay it off monthly.</p>
<p>DS has had a credit card since his college days. Seems to be almost a necessity in today’s world. Carrying cash has always scared me. Having a MC/V is also important for establishing credit for down the road. He wouldn’t have to use it, given the fact that he prefers cash, but he’d have it ‘just in case’. </p>
<p>At the end of the day, they do what they think is best!</p>
<p>DD (24) has had her own credit card for several years. She uses it for small things and pays it off immediately, even before the due date. Treats it almost like a debit card. But her credit is excellent and she does not have to pay any utility deposits when she moves, passes all rental credit checks and sails through hotel and car rentals. Things that the debit card and cash do not give you. She also carries one of mine that she is authorized to use for real emergencies if her credit limit is not sufficient .</p>
<p>The hold issue is a good reason to get a credit card. A credit card that is used regularly and paid off each month will help him to get a good credit score. He can use his debit card for daily expenses, but use the credit card once a month or so just to establish a good history. This will help him when he wants a car loan or anytime a credit check is required.</p>
<p>Worse are debit cards with Visa or Mastercard capability to do “credit” transactions. Fraud on these does not require a PIN to clean out your account.</p>
<p>If your son is a college graduate, why not allow him to figure it all out and make the decision on his own?</p>
<p>I did not want my Ds to take on the responsibility of a credit card unless it was something they wanted to do, not something I wanted them to do. I remained silent about it, and they have as yet not opened one. I figure they are smart enough and educated enough to make their own decision about it. I did the same 30+ years ago; my parents stayed out of my financial affairs and I was fine with that.</p>
<p>'If your son is a college graduate, why not allow him to figure it all out and make the decision on his own?"</p>
<p>I would never talk him into doing something he really doesn’t want to do, he is quite stubborn. I do feel that it is still my job as a parent to give him advice, and I’m realizing that I’m running out of time. I think it’s a mistake to live in NYC without a credit card, and I’d rather have the credit card in his wallet be his own, and not mine. I don’t think he is concerned about a credit card being a responsibility, he just doesn’t have enough reasons to be clear he wants one. I don’t think he’s heard many of these reasons.</p>
<p>I don’t mean to tell you how to parent, but it is pretty easy for him to google “do I need a credit card” and immediately get all of the information given on this thread. What exactly are you worried will happen to him in NYC if he doesn’t have a credit card right away?</p>
<p>Both of my sons have credit cards. We thought it was important for unexpected/emergency expenditures. A good credit history is a must if they ever want to buy a house or a car. S1 just bought a new truck this week and bought his house just two years out of college. He started building his credit history while still in college.<br>
S2 got his credit card right after college graduation last year. He uses it for all his gas fill-ups and for paying bills online.</p>