this post was submitted on 29 Jul 2024
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Credit Cards

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Hey, I was wondering if someone needs credit to buy things. People in my family have said I wouldn't be able to buy a car or a house without credit. But if I'm saving up cash to pay for things outright, do I really need credit?

Note: I’m sorry if this is the wrong place to ask.

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[–] [email protected] 2 points 3 months ago (2 children)

But if I’m saving up cash to pay for things outright, do I really need credit?

No. If you have enough cash to buy things outright, then you don't need credit to buy things.

On the other hand, you do need a credit score to rent an apartment, or to qualify for a mortgage. (If you have no credit history, but have proof of income, some landlords will risk renting to you.) Since most people can't ever afford to buy a house with cash--a mortgage is a form of credit, albeit not revolving credit--and certainly can't do so without renting a place in the meantime, that could make things challenging for you.

OTOH, if you're disciplined, then having and using revolving credit accounts can be a net positive. For instance, certain credit cards give you 'cash back', such as .5% of all of your purchases. As long as you pay your card off every single month, and never, ever float a balance, then that 'cash back' is effectively a .5% discount on everything you've used that credit account for. It also means that you have a reserve of sorts to deal with genuine emergencies where you may not have liquid cash on hand.

I'm very much in the camp of having, but still hating, credit cards.

[–] [email protected] 3 points 3 months ago

Plus the "rewards" from credit companies are paid for by merchants leading to price adjustments for all items regardless of payment method. If you aren't using a credit card you are paying me to use one.

[–] [email protected] 0 points 3 months ago

Yeah I’ve seen that with apartments so far it’s kinda a 60/40 if they check. Though I wish I could pay 3-4x the rent first month to counteract credit.