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Are credit cards worth it? Here’s what Suze Orman thinks

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Suze Orman isn’t a big fan of credit cards, but she thinks they can be useful.


Key points

  • Suze Orman thinks credit cards should be used sparingly.
  • She prefers cash or debit cards to credit cards.
  • But she thinks credit cards serve an important purpose.

Credit cards are a financial tool that has generated a lot of controversy. While some financial experts tout the many benefits of using the card, others advise people to steer clear and not use a credit card at all.

But while there are plenty of black-and-white takes with people claiming credit cards are either wonderful or terrible, Suze Orman is a financial expert who takes a more nuanced approach. In fact, while Orman believes credit cards can serve an important purpose, she also believes they should be used “sparingly” and only in limited circumstances.

So when does Orman think credit cards are worth it? Here’s what you need to know.

Credit cards can help you reach an important financial goal

Unlike other financial experts, like Dave Ramsey, Orman isn’t completely against credit cards. In fact, she made it clear that credit cards are so valuable that all consumers should use them to reap the benefits.

“I want everyone to have at least one credit card,” Orman said on his blog. The reason is simple. She wants people to have a card “to help build a strong credit rating.”

Credit cards can help build credit in several ways. When you pay your card, it creates a record of payments on time. Payment history is actually the most important determinant of your credit score. Credit utilization ratio – credit used versus credit available – is another important factor, and having a card helps you show that you can be responsible by not using a lot of the credit available to you.

Because of the many ways credit cards can help you build your credit report, Orman says, “a credit card report is an essential part of building your credit score.”

That doesn’t mean Orman is a fan of credit cards.

Although Orman urges everyone to have at least one card to help build their credit scores, that doesn’t mean she wants people to charge big on their cards — or even open multiple cards.

“The goal should be to use it as sparingly as possible,” Orman says of credit cards. “Using cash or a debit card is my favorite way to cover the majority of your day-to-day expenses.” She suggests using the card “for a few expenses each month that you know you can pay for in full,” and avoiding charging anything else to the card so you don’t lose your mind.

She also indicated that it bothers her when people open new cards just to qualify for cardholder bonuses. “A lot of credit cards have great deals to get you interested, like no annual fee or a very low first-year interest rate,” she explained. “Then after the first year, they will often start charging annual fees, and the interest rate on your balance will skyrocket to 15%, 20% or more.”

She doesn’t believe in opening multiple cards once you have one you can use to build credit, and she cautions that overspending is a very real risk.

Now, while Orman is right that it’s a bad idea to have multiple cards if you can’t control your spending, the reality is that those who are responsible and pay their balance in full each month could indeed benefit also new benefits for cardholders. as credit card rewards.

So you’ll have to think carefully about whether you should follow Orman’s advice and use credit cards sparingly or whether charging your expenses to earn rewards might be a better approach for you.

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