Should I get a credit card?

[Vanquish-Storm]

I just put everything on my credit card, it's 0% free money "init...

 

[Laurio]

As long as you pay it off each month you will be fine. Just be sensible with it! I only recently i.e. within the past year got a credit card and that was only for the benefit of making online purchases, should anything go wrong etc.

 

[the shadow]

an interest rate on purchases of 34.94% p.a. variable on my cc
Happy as Larry this months bill less than 5 quid
Just Building up credit for me

 

[PhilGQ]

And what about using a 0% credit card to pay for your car insurance in one lump sum, thereby saving hundreds in interest over if you paid it monthly? besides, i'd much rather do that than dip into my Halifax overdraft which charges £1 per day!

I am not going to argue about the cost point, you are right in that example, but in my previous post I was making the point about managing cashflow. I guess I am advocating that certainty of a loan has value of its own. I would only advocate an overdraft for very short term borrowing e.g waiting for a cheque to clear, and even then not lightly.

You can use credit cards in ASDA, too ...

My point here was that using points saving schemes as an excuse to use credit cards is just that, an excuse. If you want to save the tiny amount of money, you can do that by shopping in slightly cheaper shops.

Worst post of the week.

Credit cards are excellent. Simply set up a direct debit to pay it off in full every month and never use it for something you dont have the money for and that instantly nullifies the argument about getting into debt, because if you run the card that way, you can't.

You are then free to benefit from:

a) Protection from fraud and problem retailers under the Consumer Credit Act
b) Rewards and promotions from card issuers
c) Specialist cards for things like free-free foreign transactions abroad.
d) Being able to do things like rent cars etc and leave security deposits without hassle or faff
Seriously, why WOULDNT you want a selection of credit cards for different purposes unless you lacked the willpower to not spend what you dont have?

Yes and simply cancel the DD when you can’t afford the repayment. Leave it until next month as long as you don’t want anything new for yourself or for someone’s birthday. It’s too easy to do.
And
a) Visa Debits (formally Delta) also offers fraud protection
b) Rewards are worth relatively little.
c) Visa Debit works aboard
d) Visa Debit works for deposits too.

My point has been from the beginning about being able to managing cashflow. I don’t see how anyone can say that is “Rubbish” or the “worst post of the week”.
As I made clear, I am not against using debt, I am against using flexible credit facilities, especially when you don’t need to borrow. Why so many people would encourage someone else to do so is beyond me. The only thing I can think of is that you’re rationalising your own actions.

 

[Mikey1000]

No seriously, only borrow the money you need to for specific purposes.

If you need a car get a loan or car finance.

If you get paid 4 weekly and have a difficult month once a year, get a small overdraft to smooth the bills out, great.

Don't bother doing your grocery shop on a credit card so you can earn 2% extra nectar/club card points or whatever. You could save more shopping in ASDA.

Who said anything about borrowing money? Use a credit card wisely and pay the bill every month!

My average bill is £2500 per month on my Tesco credit card. I use it for everything inc utility bills! (my wife uses the same card)
Depending where we shop we get between 1- 2%.
So to keep it simple let's assume 1.5%

£2500 x 12(months) = £30,000
£30,000 x 1.5% = £450 (per year)

Multiply by 3 for deals = £1350
Multiply by 4 for deals = £1800
Added bonus, we use a nectar card too! (More money)

Therefore by using my card for doing nothing more than I would have done by using cash, I'm around £2000 better off per year!
Thank you Tescos and Nectar

 

[Tom_ed1987]

The only thing which can make credit cards a bad idea is the users lack of self discipline.

 

[[TW]Fox]

My point here was that using points saving schemes as an excuse to use credit cards is just that, an excuse. If you want to save the tiny amount of money, you can do that by shopping in slightly cheaper shops.

It's not an excuse, it's a valid reason.

For example I just went on holiday. I bought every aspect of my trip from the cheapest possible suppliers but because I paid for almost all of it on my American Express card, I earnt enough Membership Reward points to transfer to a hotel loyalty programme and redeem for a free 3 night stay at a Sheraton hotel in Vancouver. Totally free. I spent no extra money to get that.

Why wouldn't you want benefits like that?

Yes and simply cancel the DD when you can’t afford the repayment.

If you'd followed the advice above and only paid for things on the card you had the money for, you wouldn't be able to 'not afford the repayment'. Only a fool would cancel the DD anyway, knowing the trouble it would cause, so its totally irrelevant.

Leave it until next month as long as you don’t want anything new for yourself or for someone’s birthday.

You are describing the dangers of having no financial discipline not the dangers of credit cards. Credit cards, like any tool, can be dangerous in the wrong hands but what you are advocating is like not having scissors in the house because hey, it's easy for an argument with your wife to turn violent or something.

a) Visa Debits (formally Delta) also offers fraud protection

Yea, sure - try rocking up a rental centre desk with only a debit card and see how far that gets you deposit wise.

b) Rewards are worth relatively little.

Not if you apply for the right cards at the right time - see above for my practical example.

c) Visa Debit works aboard

Yea, it does, and charges you for the privilage.

d) Visa Debit works for deposits too.

If you've got the cash in your current account to service everyday spending say when travelling *And* a rental car deposit *and* various hotel deposits that take days to come back off then your financial position is healthy enought that a credit card is hardly a risk for you anyway.

My point has been from the beginning about being able to managing cashflow. I don’t see how anyone can say that is “Rubbish” or the “worst post of the week”.
As I made clear, I am not against using debt, I am against using flexible credit facilities, especially when you don’t need to borrow. Why so many people would encourage someone else to do so is beyond me.

We've explained why we'd encourage others to do so - there is nothing wrong with a decent credit card with a direct debit to clear it monthly.

The only thing I can think of is that you’re rationalising your own actions.

No need, my actions are entirely rational. I have never paid a penny of interest on a credit card because if I don't have the money to pay for something I don't buy it rather than just stick it on the credit card.

You are against reckless spending, whereas you think you are against credit cards.

 

[Basher]

My point here was that using points saving schemes as an excuse to use credit cards is just that, an excuse. If you want to save the tiny amount of money, you can do that by shopping in slightly cheaper shops.

They're not mutually exclusive. That was my point.

 

[Mikey1000]

@[TW]Fox... I think you're flogging a dead horse with PhilGQ, they just can't see it!!!

 

[Bossk128]

Like Fox, i use my credit card for the cashback. Use it for all household expenditure, fuel, leccy/gas, internet, food shopping, takeaways, Christmas/birthday presents, as much as possible. I really want to move my mortgage onto it too.

Once a year we get given hundreds of pounds for free.

 

[MooMoo444]

I just applied for a card after reading this topic. I can pay it off easily after purchases so the rewards are basically free money. Plus will be nice to get the cred score rolling.

 

[Yas786]

I only use my credit cards in extreme emergency as i got into serious debt a few yrs back, took me awhile to finally pay them off but now i just use it to make small purchases that i know i can pay off at the end of the month.

If you can afford to use one, then do so but if you cant then dont.

 

[Vtec9k]

I do all my spending on credit cards.

BA Amex basically gives me 1x business upgrade (~£800) or 2x economy European return flights (~£200-400) per year so I do most of my spending on that. I do fly a lot so it's worth it for me.

Otherwise I use my tesco credit card with 0% for 18 months plus 1% club card points. Once that deal is gone I'll cancel it and get another 0% one or a another good rewards one - amazon card looks good!

Add in using cashback sites and you're golden. I've probably earned about £20 cashback/rewards on a £100 order today!

 

[Basher]

I only use my credit cards in extreme emergency as i got into serious debt a few yrs back, took me awhile to finally pay them off but now i just use it to make small purchases that i know i can pay off at the end of the month.

If you can afford to use one, then do so but if you cant then dont.

Everyone can afford to use one. Some people can't manage money well enough or lack the will power to use one.

 

[Mikey1000]

Everyone can afford to use one. Some people can't manage money well enough or lack the will power to use one.

+1

 

[PhilGQ]

@[TW]Fox... I think you're flogging a dead horse with PhilGQ, they just can't see it!!!

I realise, I have put myself against the tide of opinion in this thread. I am not trying to put anyone's personal process down. If it works for you it works for you. The OP asked for opinions I presented mine in the form of alternatives because I believe the alternatives are safer.

I don't disagree with the financial discipline thing at all. Financial Discipline is however much easier in the good times.

If for whatever reason e.g redundancy, separation or large unexpected expense you fall behind, credit cards give you what I consider to be an artificial safety net, meaning you feel more secure than you are, so you may not deal with your problem the way you would if you didn't have the card(s).

Since you have no way of knowing how you will behave in those circumstances until you get into serious trouble then I just think its best avoided altogether.

 

[Glanza]

It's useful for building your credit rating, Providing you can pay off the balance at the end of each month.

I started out just putting fuel on it and paying it off to build my rating.

 

[Mikey1000]

I realise, I have put myself against the tide of opinion in this thread. I am not trying to put anyone's personal process down. If it works for you it works for you. The OP asked for opinions I presented mine in the form of alternatives because I believe the alternatives are safer.

I don't disagree with the financial discipline thing at all. Financial Discipline is however much easier in the good times.

If for whatever reason e.g redundancy, separation or large unexpected expense you fall behind, credit cards give you what I consider to be an artificial safety net, meaning you feel more secure than you are, so you may not deal with your problem the way you would if you didn't have the card(s).

Since you have no way of knowing how you will behave in those circumstances until you get into serious trouble then I just think its best avoided altogether.

Ok, this is how you do it with discipline.
First purchase with your new credit card... A pair of scissors!

Secondly open a savings account at your bank.

Now, every penny you spend on your credit card transfer the same amount of money to your savings account.
RULE 1. If you don't have the money to transfer, DO NOT PURCHASE THE ITEM WITH YOUR CREDIT CARD.

At the end of the month pay the credit card bill in full from your savings account.

If for whatever reason e.g redundancy, separation or large unexpected expense.....
DO NOT USE YOUR CREDIT CARD IF YOU DON'T HAVE THE MONEY TO TRANSFER TO YOUR SAVINGS ACCOUNT.
Get a loan if you must and use the scissors to cut up the credit card into very small pieces!!

Sorted

 

[Will Gill]

No, it's a mugs game.

that's a stupid comment, I get 0.75% cashback on everything I spend on my interest free credit card and i clear the balance every month, that's free money

on average I spend 7-10k a month so that's an extra £50-£75 a month for doing nothing, fair enough it's tesco's clubcard points but i get a nice freebie every month or offset the huge expense that is xmas

i fail to see how that's being a mug

 

[Glanza]

on average I spend 7-10k a month so that's an extra £50-£75 a month for doing nothing

that's a lot of spendage