Published in: Credit Cards | July 1, 2019

The 8 Best Reasons to Have a Credit Card -- and the 3 Absolute Worst

By:  Lyle Daly

We are committed to full transparency as part of our mission to make the world smarter, happier, & richer. You should know that offers on The Ascent may be from our partners - it's how we make money. That transparency to you is core to our editorial integrity, which isn’t influenced by compensation.

A credit card can be your best friend or your worst enemy. It all depends on what you're using it for.Two Excited Women Sitting On Sofa Using Laptop As One Of Them Holds Her Credit CardImage source: Getty Images.

You might think the question "why do you own a credit card?" would have an obvious answer. It's a payment method, so you use it to pay for purchases.

Although that's one reason to have a card, it's far from the only one. When we surveyed adults on why they had credit cards, they gave us over a dozen different reasons.

A lot of these reasons were smart and responsible, but there were also some that could prove problematic and cost consumers a lot of money. That's why we're going to dive into the best and worst reasons to have a credit card, based on the results of our survey.

The best reasons to have a credit card

Our survey was full of savvy consumers who were using credit the right way. If you're using your credit card for any of the reasons below, then you can give yourself a pat on the back. After each one, we've included the percentage of consumers who said it was one of their reasons for getting a credit card.

To build credit history (64.4%). Your credit history and score can have a huge impact on your life, and a credit card is an effective way to improve them. By using a credit card every month and paying the bill by the due date, you can build a high credit score, which can help you get low rates on loans, qualify for rental homes or even jobs, and more.

To earn purchase rewards (48.4%). With the rewards rates on the top cash-back cards and travel rewards cards, a credit card can get you quite a bit of value back on your regular spending.

The convenience of not having to carry cash (41.9%). A credit card is a much more convenient payment option than carrying cash around. With cash, you need to go to the ATM any time you run out, and if you lose your wallet, then you also lose whatever cash is in it.

To help manage a budget (23.6%). Everyone should have some sort of budget. It's a lot easier to manage that budget if all/most of your transactions are made with the same payment method and are easy to track through online statements. Many popular credit cards will even break down your spending into different categories for you.

Fraud protection (22.9%). Credit cards are a more secure payment method than debit cards or cash. In the event someone makes fraudulent purchases with your credit card, the most you can be legally liable for is $50, and that's only if you don't tell your card issuer that the card was lost or stolen before the charges are made. Several card issuers have zero-liability policies for fraudulent transactions.

Balance transfer/debt consolidation (17.8%). There are quite a few balance transfer cards with 0% intro APR offers, which are a smart way to pay down debt.

The sign-up bonus (15.0%). The biggest credit card sign-up bonuses can be worth hundreds of dollars, so if you're planning to get a new card anyway, then it makes sense to see if you can get a nice bonus out of it.

To waive foreign transaction fees (6.3%). For international travel, there's no reason to pay an extra 3% on every transaction, given how many credit cards allow you to avoid this fee.

The worst reasons to have a credit card

Some motivations to have a credit card can put you at risk of future financial troubles. If you've gotten a card for any of the reasons below, then you may want to reconsider.

To make purchases you otherwise couldn't afford (35.9%). Some consumers fall into the trap of financing purchases with their credit card, which often results in credit card debt. Look at it like this: Sure, it may be tempting to buy what you want right away, but you end up paying extra for it every month that you get charged interest.

Cash advances (7.6%). Unless there's a huge emergency and you have no other option, you're better off forgetting that you can even get a cash advance with your credit card. The interest rates on credit card cash advances are very high, and you start getting charged interest on your advance right away.

The exclusive status of premium credit cards (3.9%). Considering that premium credit cards tend to have the highest annual fees, it's a bad idea to get one solely to impress people with your sleek titanium card. If you can actually make the most of the card's perks, then that's a different story.

Using credit wisely

Fortunately, the stats show that far more consumers have their credit cards for good reasons than for bad ones. And of all the worst reasons we found, only one was particularly common among consumers. To make sure your credit card use doesn't come back to bite you, stick to using your cards for the smart reasons listed above.

Our #1 cash back pick has a surprise bonus

This may be the perfect cash back card! That's because it packs in $1,148 of value. Cardholders can earn up to 5% cash back, double rewards in the first year, and avoid interest well into 2020. With such a deep bench of perks you'll wonder how this card packs in a $0 annual fee. Best yet, you can apply and get a decision in two minutes. Learn more with our in-depth review.

Find the right card for you

Cash Back & Rewards