To credit or not? – Should you get a credit card?

A lot of personal finance bloggers, particularly those pursuing financial independence, are strongly against credit cards or having any form of debt at all. While there are good arguments for this, personally I don’t think it’s quite as simple as that. The question of should you get a credit card is personal but this post will give you the pros and cons to help make your decision.

There are a lot of benefits to credit and having a credit card as long as you use it wisely, which I will outline in this post, along with the potential drawbacks.

Credit has been part of society for centuries. While this alone doesn’t make it a good thing, it does demonstrate that it has been a key component in financial markets and a lot of supply chains – and governments – would collapse without it.

It even gets a mention in Lin Manuel Miranda’s hit musical Hamilton: “He doesn’t get enough credit for all the credit he gave us,” sings President Madison in the finale Who Lives, Who Dies, Who Tells Your Story, which surely makes it worth considering!

In this post I will explain the basics of credit cards, where to get one and the things you should look to avoid.

It’s important to note that this does not constitute personal advice and if you’re not sure whether an investment or savings account is right for you please seek professional financial advice.

The basics of credit cards

In simple terms, a credit card allows you to borrow money against a line of credit, known as the card’s credit limit.  You use the card to make basic transactions, which are reflected on your bill. The bank then pays the merchant, and later you pay the bank your bill.

When it comes to getting a credit card or any form of credit, the provider will perform a credit check on you. Everyone has a credit score, which effectively determines how likely you are to pay back what you borrow. Ideally, you want to keep this number as high as possible.

However, if you never make use of any credit, the bank will find it hard to establish whether or not you will be able to pay back a loan. While this won’t be a problem most of the time, it could make it harder for you to get a mortgage or any other loan you may require in the future.

If you want to build up your credit score safely, buying a small amount on a credit card each month and paying it off in full can really help.

Of course, all of these benefits can also be negatives. If you take on more credit than you can afford and start missing payments then your credit score will fall. Rather than helping you get a mortgage or another kind of loan in the future, this will make it much harder. You could even struggle to get a new mobile phone contract.

Where to get one (if you want one)

It seems you can get a credit card from pretty much anywhere now. But just because you can doesn’t mean you necessarily should.

I got my first credit card from the bank I used for my current account. I was only 21 when I got my first card and knew very little about all the options available. So, I decided to sit down in the bank with an adviser to decide on the best option for me. You don’t have to do this, but I would recommend taking advantage of this free service.

You’ve probably been offered a store credit card before when you’ve been paying for a purchase. These usually come with a store discount or similar exclusive offer. These incentives may be very tempting, but you must read the small print before you sign up for something you may later regret. Many come with high interest rates and penalties that could end up costing you a lot of money.

Other options

If you’re not sure a traditional credit card is for you there are other options. One popular alternative is PayPal Credit, it is flexible and the debt is cleared once you’ve paid it off. However, much like a credit card, this is still only a good idea if you have the funds to pay for the purchase.

Alternatively, some people chose to solely use a debit card. This offers a lot of the same consumer protection as a credit card but will not allow you to spend money you don’t have, unless you have a pre-agreed overdraft.

There are also other kinds of loans available. Mortgages are a common example – you’re hardly going to buy a house on a credit card. But there are also other financing options available for all kinds of purchases, including sofas, electronics and cars. Of course, like all forms of credit, you should make sure you will be able to pay the full amount before you take on the financial commitment.

What to avoid when getting a credit card

As a general rule, you should always avoid spending more than you can pay in a month. Credit limits are often higher than your monthly salary, but this does not mean you have to or should spend more than you earn.

If you do need to make a large purchase, come up with a payment plan in advance so you know how long it will take you to pay it off. Once you have a plan, make sure you stick to it to avoid incurring unexpected interest fees.

Most importantly, you must never miss the minimum monthly payment. If you do, your credit score will go down. This could make it harder for you to get a mortgage or even get a mobile phone contract in the future. You will also have to pay interest on the money owed, increasing your payments significantly.


I felt this needed its own section as it has the potential to be incredibly dangerous. While it is not the only service of its kind, it is currently the most prominent.

I’ve seen a lot of influencers promoting Klarna to their, predominantly young and impressionable, followers. This is often added to a post encouraging them to buy from a fast fashion outlet, which they know their followers will want to buy.

Klarna is marketed as a safe option – ‘buy now, pay after pay day’ seems like a great idea to many people, especially those living paycheque to paycheque. Since lockdown began, 23 percent of 18-24-year-olds have turned to buy now, pay later services.

They claim the service won’t affect your credit score, but there are plenty of accounts of people saying their credit score has fallen after using Klarna.

If you read the terms and conditions carefully there are serious consequences to missing a payment or not having enough funds in your account. They even threaten to send in debt collectors and make you liable for the costs this incurs.

Hidden in the small print of the T&Cs…

Instead of encouraging young people to spend money they don’t have, wouldn’t it be great if we taught them more about personal finance and encouraged them to save more, just like A Dime Saved does in this post.

So, should you get a credit card?

Like all financial decisions, credit is a personal choice and you should always do what is right for you. However, I hope this post helps you consider the different options and raises some points to consider when making your decision.

If you found this post interesting, please like it and share across social media or send it to your friends. I’d also love to hear your thoughts and experiences. What do you think about credit cards and Klarna?

31 responses to “To credit or not? – Should you get a credit card?”

  1. […] general, regardless of interest rates, it is sensible to think carefully before using a credit card, particularly if you’re struggling to make ends meet each […]

  2. […] first contactless limit increase for credit and debit cards occurred near the start of the pandemic. This was at least partially due to fears that the virus […]

  3. […] debt is seen as something to be avoided, and with good reason. It can cause huge amounts of difficulties and pain for individuals, […]

  4. […] To credit or not to credit […]

  5. This is a great post to share with my older grandchildren. Thank you for posting it.

  6. I like how you carefully explained everything on how credit cards work. Credit cards are great for discounts/reward/travel points but I love how you also elaborated on the “financial commitment” that they come with 🙂 Thank you for putting together this post! I think younger people will really appreciate this post 😀

    Mari |

    1. The Twenty Percent Avatar
      The Twenty Percent

      Thank you so much for reading and commenting. I’m glad you found the post helpful. I aim to help younger people better understand financial issues!

  7. Money Millenified Avatar
    Money Millenified

    Great overview of credit cards!

    I have always been a fan of using credit cards in order to maximize the benefits that they come with- like rewards points and discounts.

    While I think it’s great to use them, you definitely need to make sure you understand the actual process behind them and have the right mindset when using them. You did a great job elaborating on this!

    1. The Twenty Percent Avatar
      The Twenty Percent

      Thank you! I agree, the process is actually quite complex and is something that should be discussed more.

  8. a Life on a Dime Avatar
    a Life on a Dime

    I am a firm believer in using credit cards responsibly and paying the balance off each month. I think they can be a great learning tool and help establish credit. I am VERY weary about companies like Klarna as they seem a lot like pay day lenders and I think they prey on the people they claim to help. This was an excellent post and I hope it steers people away from services like that!

    1. The Twenty Percent Avatar
      The Twenty Percent

      Thanks so much for the comment. I agree with everything you’ve said and hope more people will start to see the dangers of firms like Klarna soon!

  9. Thanks for the tips. I’m staying clear of CCs at the money but I know now how to improve my credit score if I ever go back to one.

  10. I used to have a few store cards, mainly for the offers and previews, but I always paid them off in full at the end of every month. Now I only have one credit card and I do the same with that. Credit cards are good, provided you only buy what you know you can afford to pay for without going into debt and incurring interest. Another bonus is they help you build up a credit score, which can be useful when you want to apply for a loan (for a car or DIY project) or a mortgage 🙂 Lisa

  11. Great post ! I really wish schools focused more on teaching young people going out into the world about how to handle money well, credit and even credit scores.

  12. I have a credit card which I use to make a single purchase a month to build up my credit score. If it wasn’t for how the system worked that I needed to use a credit card to build a good credit history for future loans and mortgages, I wouldn’t have one. It doesn’t take much before using one gets out of control and for debt to spiral

    1. The Twenty Percent Avatar
      The Twenty Percent

      I agree- it’s very easy to get into a spending cycle without even realising it. Credit needs to be managed very carefully!

  13. Great post! Thank you for sharing this! It is very useful!

  14. I’ve never had a credit card before – I just use my debit for all phone bills etc but it’s definitely something I will get before looking at buying a house. Klarna is also something I have never used, but many friends have but I have read the dangers which scares me a little. Proves you always have to read the small print! Great post; thanks for sharing x

    Paige // Paige Eades

  15. This is a great post! I definitely enjoy having a credit card as a last resort for if shit *really* hits the fan, but I don’t really spend on it anymore. I’ve recently tried a few payment plans on Afterpay because I get paid weekly so it helps me manage large costs like glasses well, but I definitely think it’s irresponsible to be promoting these schemes to young people who don’t understand the implications fully xx

  16. Great post! Like many of the other comments are saying, I’d never heard of Klarna before now! Probably for the best. I think credit is great if used responsibly, but people really need to be objective of their spending habits. I think a lot of people get carried away with “mental accounting” and justify things by saying “oh, I’m getting a raise soon so I can treat myself now”. And THAT is how you fall into financial trouble regardless of a credit card…

  17. Great post Katie! I love using CC’s to get free money. Yet I don’t think they are right for everyone. You are spot-on everyone should avoid spending more than they can pay off that month.

    Thanks for sharing this.

  18. You definitely need to tread carefully with credit, or you will end up like me, I probably can’t even borrow a book from a library, my credit score is so low.

    Let’s just say mistakes were made.

  19. Great post! I’ve struggled with bad credit in the past but that was due to life circumstances. But I’ve had credit cards for years and I love mine, especially my travel ones where I get points or mileage, or special access to airport lounges, when I make purchases.

  20. Boomer EcoCrusader Avatar
    Boomer EcoCrusader

    Excellent post. I hadn’t heard of Klarna before. An important thing when shopping for credit cards is to compare fees. Some cards charge an annual fee in exchange for travel or other rewards. It’s always good to do the math to make sure the rewards outweigh the fees.

    1. I haven’t go any form if credit, so im hoping to build a credit score for future, it is a very difficult and carefull process that you have to follow though

      1. The Twenty Percent Avatar
        The Twenty Percent

        Yes I agree, it can be a very daunting and tricky process. Good luck with it!

  21. This is a great roundup. Credit cards can be confusing for many, and they can get you in deep trouble if not used properly. I think the key is that, while you need credit cards and other forms of credit to boost your scores, you also need to be responsible. If you are always piling up debt you can’t afford to pay off, cards can hurt you rather than help.

    1. The Twenty Percent Avatar
      The Twenty Percent

      Thank you very much! That’s very true- like most things, they can be great if they’re used responsibly.

  22. kalliopechasing Avatar

    Great post! I honestly don’t know why I hadn’t heard of the don’t purchase what you can’t pay off in the month tip until this year.
    It seems so simple! I should’ve been hearing that for years.
    Thank you for sharing.

  23. Wow, you did an amazing job explaining what credit is, what to do, and what not to do. I’ve never heard of Klarna before, but I’m so glad you mentioned it. I’ll be sure to warn my friends about it. I’m always very hesitant when it comes to opening a new credit card, but it never hurts to get some advice. Thanks for sharing.

    Much love always,

  24. Wow! This was very insightful and helpful for me. Thanks for sharing!

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