I am in my mid-50's and never really needed a credit card before. Cash or a good check was always good enough, but I am finding it more and more difficult to function financially without one. I hear all the horror stories about stolen identity or lost cards being used and wiping out someone's life savings which makes me reluctant to apply for one. However I was considering changing my auto insurance carrier and the new company ran a credit check on me which, of course, turned up nothing, so they would not consider me as a client. I also recieved a gift certificate to Amazon.com which I couldn't use because I didn't have a credit card. Even to use my online prescription drug plan requires a credit card. I can't even rent a car. Why won't people accept bank checks anymore? I would think NOT needing a credit card for this long would speak volumes about my financial stability. All they have to do is call my bank and they will find out that I have enough cash behind it. I pay my household bills by having the utilities deduct the amount directly from my checking account. I bought my computer with something call an e-check which is like the same thing. Even if I did get a card, I would feel psychologically obligated to pay it off fully each time. I really have a large fear of debt, even a few dollars. Someone told me that is not the way to establish credit. But if a balance is carried on the account, it will start costing money! I don't believe in getting into debt just for that. I always pay my bills promptly and in full. That should be enough to show I am good for the money. Can anyone give me some advice regarding this situation? Also, I would like to know how the credit card companies make money. I assume that's why they are in business like everyone else. If every client paid off their bill each time, there would be no interest penalty. Thanks in advance. P.S. I laugh every time I see that comerical where a group of people are dining in a restaurant and the waiter comes over and tells the host that his credit card was refused and all the guests start fishing in their wallets & purses for money. Wouldn't that guy know he was overdrawn on his account? Why is it such an ordeal for everyone to scrape together a few bucks?
"Why won't people accept bank checks anymore?" Too easy to forge, difficult to know if it is actually covered, a waste of time to try to track down people who bounce checks for small amounts. Costs of handling paper. Credit card systems that allow anyone to go almost anywhere in the world and pay for things, yet where the account can be turned off quickly if compromised to limit the banks risk. The banks make the money both on interest charged on consumers carrying balances, and on merchant fees for each transaction. A couple percent on all your retail expenses is worth it to the bank, and if you pay 7% to 24% APR forever on top of that, life is good. Of course, if a lot of people lose their jobs and default, if a bank had a lot of higher risk accounts, 24% APR that never gets paid is still 0, but that's why they got their high interest and fees up front. Also, who wants to risk real cash on deposits or payments before receiving goods or services, for merchandise to be shipped, car rental deposits, hotel checkin deposits, airline tickets where the airline could go bankrupt, etc., when the bank can be a payment intermediary strong enough to wrest a payment back when the merchant fails to deliver or disappears. You can't know the financial condition of every company you deal with, but their bank can, just as your bank can know yours. That's why your credit reports will show monthly inquiries from each creditor when you have credit cards.
Just so you know: You do NOT need to carry a month to month balance to build credit. It might help a little bit, but full payoffs month to month will work also.
The answer for you may be a debit card; which would "act" like a credit card. This would be in place of writing a check, it takes the $ out of your account directly, but you make the transaction just like a credit card type. You also may wish to investigate a "travel or convenience" card like American Express or Diners Club, where you MUST pay off the balance monthly. In short, in this electronic day and age, you MUST have credit, and now a credit card for many transactions. I highly recommend that you speak with your bank; most likely you have a long history as a customer. They can help guide you through the best solution for you. I am certain they offer some type of credit card also, which may be a good start. And, since you're shopping for cards right now, if you plan on paying your balance in full each month, you may want to consider some type of "reward card". Here you can get cash back, or other types of rewards just for using your card (as you would a check).
