Why do I need credit?

I have been asked this question so many times I have lost count.  Many people are so afraid of debt that now they are questioning if they should establish credit.  Well, the answer is yes, you need credit because all major purchases requires it, jobs consider it, and insurance companies utilizes it.  At some point you are going to want a car, house, or another big ticket item.  You must have credit established to be considered worthy of making major purchases, unless you have saved all the cash you will need for the purchase.  Even if you don't use the credit for purchases they now look at your credit report for jobs and insurance to determine if you are responsible.  What you must understand is that just because you have a credit card doesn't mean you have to use it.  You really only need major credit cards, due to department store cards only have the one purpose and usually the interest rates are awful.  If you must have a department store card I would say Wal-Mart due to you can get food, clothes, home and office supplies, and fix your vehicle. 

When selecting a credit card check to see if there is an annual fee as well as if the provider will close the account if there is no activity on the card.  Some providers will close your line of credit if you do not utilize the card, which forces you to make purchases during the year.  There are other providers which will only close your card upon your request or due to non payment.  Establishing credit is not to be taken lightly, it is a major step and you must do your homework as a consumer.  Do not just apply for credit due to the merchant is offering a discount from the bill, due to you will most lightly not pay it off at the end of the month or you will keep using the card.  These cards usually carry a high interest rate and you don't know what limit you were approved for or the interest rate.  If you don't pay off the card you may very well offset the discount you received with the interest you will accrue.  Credit can be your friend or your enemy, depending on how you treat it.