I have met many people who, aware of how vociferously the credit card industry targets young people, do not get credit cards to avoid deep debt and high interest rates, which is very reasonable thinking. Instead, these people make purchases with cash or a debit card. Still, I think credit cards are superior to debit cards for a few reasons:
#1 If an identity thief gets a hold of your debit card account information, s/he can withdraw your money immediately. If the same thing happens with a credit card, you can dispute the charge with your credit card company.
#2 Some credit cards offer points with spending-usually for things like airline miles, gas, or even money-while debit cards do not. (I currently use Charles Schwab’s 2 percent cash-back Visa, which, according to an August NYTimes article, is one of the best cash-back cards around).
#3 You start building a credit rating with a credit card, which is important for big transactions you may make later, such as renting an apartment, buying a car, or buying a home.
So for these reasons, it’s a good idea to get a credit card, just as long as you pay your monthly balance before the interest rate kicks in and don’t spend over your limits. Banks are raising the interest rates on their credit cards to the high teens and twenties. Best to avoid that altogether by paying your bill on time.
