It is true they are powerful but don't hold out on getting a credit card for too long if you don't have one. They're really useful for building your credit score which will get you a better rate when you apply for a loan when you buy a home or car. This can save you tens of thousands of dollars in the long run. If you're worried about tracking and the ability of people to harvest information on your purchases use them solely for bills and no one will know any better. After maintaining a healthy relationship with your card provider ask for a higher limit, and continue to do so. The more credit available to you at any given time compared to the amount you're using affects your credit score as well. Apply for more cards and use each to pay for a bill. They also have amazing customer protection and will help you if you are ever the victim of fraud. Finally, they can actually get you tickets to things which are sold out from what I understand. Don't quote me on that but I heard that if you really need a ticket to see, say, the NBA finals, and all the tickets are sold out, don't go to craigslist (well try that too, and the scalpers outside I suppose but be careful), try calling your credit card company. It might be a bit more than face, but in a bind, they can help you out. I've never done that, I just graduated from college, but I listened to some financial tapes a while back and this is the advice I heard. I cannot exactly recall the author of the tapes or I would recommend them. Very quality and informative.
I've basically stopped using my credit cards. I am cash only nowadays except for the occasional online purchase, and I am starting to use prepaid debit cards purchased with cash for those too. The straw that broke the camel's back was their move to start using my purchase history against me - i.e. manipulative marketing:
I think it is a terrible state of affairs when the only people who can have privacy are those either rich enough to opt out of the mainstream (no mortgage, no car loan, no college loans for the kids, etc) or those willing to live in a state approaching poverty. I'm fortunate enough to be in the former group, but I have a lot more compassion for those in the second group.
I also stopped using credit cards, but for also an second reason. Banks has started to view themselves as service providers with the right to dictate if, how and why I can take out cash. First they limited the number of cash I can withdraw to 2k/week, and secondly, the require an "explanation" every time I transfer money from the account. If the "explanation" I tell the teller is not satisfactory, then they will deny the transaction.*
That the purchase history is not mine is truly a large issue. The banks should not have any right to "listen in" on my transaction and use what ever information they fish out to their business advantage. They should be behaving as the bank of old, which was more of a care holder of assets than anything else.
*All based on banks in Sweden, and to a degree, Swedish banking laws
You do not need to ever use a credit card to have an excellent credit score. I had a FICO score of 795 when I bought my first house having never used a credit card. These days, most young adults have student loans to establish a credit payment history. If not, simply getting a credit card and leaving it in a drawer still works your "average age of open lines of credit" stat. You don't have to use the credit.
I recently got dinged for leaving my credit card "in the drawer".
The "credit utilization" component of my rating according to creditkarma.com went from A to C because my utilization was 0% (I pay for everything with my Simple debit card or direct debit). 0% is in the C bucket, while 1-20% is in the A bucket.
I started using it like that. I use it for some of my purchases every month, and have them debit the full balance at the end of each month. My rating in that category went back to A the very next month.
