Do I really 'need' a credit card?
Discussion
As per title - Not an 'I have loads of money and don't need one' post but quite the opposite really..
So basically my parents always told me to be wise with money from a very young age and we always went with the motto
'if you havent got the money for something, save up and buy it when you have' I save up if I need anything and I get by.
So anyway -Talking to a few mates the other night about credit cards (yeah, boring I know!) and they were saying that I really should get a credit card so build up my credit rating.
I already have a mortgage and a few direct debits etc. never missed any payments etc.
So - will using a credit card for fuel and everyday things and paying it off in full at the end of every month from my wages make any difference to my future credit rating?
Thanks!
[EDIT - I realise I have spelt "Is I really need a credit card in the title, I'm not a Chav, honest!]
So basically my parents always told me to be wise with money from a very young age and we always went with the motto
'if you havent got the money for something, save up and buy it when you have' I save up if I need anything and I get by.
So anyway -Talking to a few mates the other night about credit cards (yeah, boring I know!) and they were saying that I really should get a credit card so build up my credit rating.
I already have a mortgage and a few direct debits etc. never missed any payments etc.
So - will using a credit card for fuel and everyday things and paying it off in full at the end of every month from my wages make any difference to my future credit rating?
Thanks!
[EDIT - I realise I have spelt "Is I really need a credit card in the title, I'm not a Chav, honest!]
Edited by dionbee93 on Wednesday 12th February 11:52
LittleBigPlanet said:
Yes is the short answer.
This. I use my credit card for the exact, same purpose: payment of day to day items and pay in full every month. If you have no intention of ever using credit, then not useful; however, given the importance of credit for large ticket items (if you ever wish to purchase a house), or even a mobile phone contract, then you will need a credit history.
Credit is an excellent tool - if used correctly i.e. monthly repayment schedule and total costs over duration of credit calculated, understood and make financial sense i.e. the numbers work. Where credit can be destructive is when people lack financial awareness, self-control, and the ability to perform basic arithmetic.
putonghua73 said:
LittleBigPlanet said:
Yes is the short answer.
This. I use my credit card for the exact, same purpose: payment of day to day items and pay in full every month. If you have no intention of ever using credit, then not useful; however, given the importance of credit for large ticket items (if you ever wish to purchase a house), or even a mobile phone contract, then you will need a credit history.
Credit is an excellent tool - if used correctly i.e. monthly repayment schedule and total costs over duration of credit calculated, understood and make financial sense i.e. the numbers work. Where credit can be destructive is when people lack financial awareness, self-control, and the ability to perform basic arithmetic.
Buying your next car?
Min £300 deposit on your credit card, balance payment paid from same bank.
If things go wrong the bank can then help.
Always book holidays with a credit card, or at least the deposit.
Credit card companies really can fight your corner when things go wrong.
Same as above, have a credit card (well a couple actually) and use it for all day to day spending. Balance cleared in full at the end of every month.
Two reasons, firstly the protection you get from the consumer credit act because you've bought something on "credit, secondly I get 0.5% cashback on everything I spend on it. Might not sound like a huge amount but it adds up over the year.
Unfortunately it seems like the cashback cards, with the exception of a few Amex ones, have gone now so I'll keep mine until they decide to kill it off.
The second credit card I have I only use for foreign transactions as it has no charges or exchange rate loading for doing so. Even getting cash out of an ATM is cheaper on it that using my debit card.
Two reasons, firstly the protection you get from the consumer credit act because you've bought something on "credit, secondly I get 0.5% cashback on everything I spend on it. Might not sound like a huge amount but it adds up over the year.
Unfortunately it seems like the cashback cards, with the exception of a few Amex ones, have gone now so I'll keep mine until they decide to kill it off.
The second credit card I have I only use for foreign transactions as it has no charges or exchange rate loading for doing so. Even getting cash out of an ATM is cheaper on it that using my debit card.
blue_haddock said:
I have a tesco clubcard credit card and use it for all my daily spending plus big ticket items, Its paid off in full each month automatically.
You get the protection of paying by credit card, plus a months interest free credit plus club card points on all purchases.
I do this. If you can use the deals they are worth 3x face value. Eg a £20 annual railcard costs £6 in vouchers plus £2 cash. You get the protection of paying by credit card, plus a months interest free credit plus club card points on all purchases.
https://secure.tesco.com/clubcard/search-results/a...
Aren't things you buy insured as well?
I have one credit card which I always try to keep at a zero balance and only use for two purposes.
1)If I am buying anything (especially online) for more than £100 I will pay using my credit card for the added consumer protection.
2)If you are staying in a hotel or hiring a car they will pretty much insist on holding a deposit on a credit card.
Other than that, I can borrow money at 0% over 18 months for a 3.5% fee, but I have never used this.
If it wasn't for those two points, I wouldn't personally have one.
1)If I am buying anything (especially online) for more than £100 I will pay using my credit card for the added consumer protection.
2)If you are staying in a hotel or hiring a car they will pretty much insist on holding a deposit on a credit card.
Other than that, I can borrow money at 0% over 18 months for a 3.5% fee, but I have never used this.
If it wasn't for those two points, I wouldn't personally have one.
It allows flexibility to make large purchases without having to keep large balances in a current account and to exploit the interest free period. As others say it gives additional protection. Many give cashback, insurance, cheap exchange rates, airmiles, travel perks etc which is the main reason I have them. Only usually make sense if you clear them every month. If you only get one, get a Mastercard or Visa as, whilst Amex give the best deals, they are far from universally accepted.
Edited by Graveworm on Wednesday 12th February 13:30
Yes, worth it for the section 75 consumer protection alone, that has saved me from losing large sums of money on more than a couple of occasions.
Also good for emergencies if you are abroad, good for building and maintaining credit.
I've had one since I turned 18 and haven't abused it in the 15 years i've had one. I use it to pay for holidays, large car bills, and expensive one off purchases where I want an extra layer of consumer protection. Also pretty much a necessity if you are hiring a car abroad.
So yeah, get one.
Also good for emergencies if you are abroad, good for building and maintaining credit.
I've had one since I turned 18 and haven't abused it in the 15 years i've had one. I use it to pay for holidays, large car bills, and expensive one off purchases where I want an extra layer of consumer protection. Also pretty much a necessity if you are hiring a car abroad.
So yeah, get one.
I've a asda credit card and get cashback on it. I buy my fuel or little things on it through out the month then pay it in full when I get a statement. Get a fair bit back from it tbh
IF you get a credit card make sure you pay the full balance monthly or if interest free you clear at least minimum payment monthly / the full balance before the promo rate finishes or it could mean you get interest .
IF you get a credit card make sure you pay the full balance monthly or if interest free you clear at least minimum payment monthly / the full balance before the promo rate finishes or it could mean you get interest .
I doubt if you have a mortgage that having a credit card is going to make much odds to your credit rating in a positive/negative way. For buying stuff and being protected then yes, but most people only need a decent credit rating to borrow loads of money at some point, you've already done that.
Handy things for travelling and protecting big purchases. Also getting cheap loans. I got a 20 month interest free balance transfer. There was a fee of 2.4%. So am actual interest rate around 1 5%. Used the cash as part of paying off a PCP at a 6.5% rate. The car was one of those deals where a deposit contribution and two free services was conditional on using PCP.
Martin Lewis has a page on the best deals.
I currently have 2 cards A balance transfer card not used for any spending. A card for using.
I also have a pay as you go credit card which I use for any contact less and small card purchases and paypal. I work on the theory that the fewer places I use my main cards the less chance they get compromised. The payg card never has more the £200 so it isn't a huge problem if it gets compromised.
And as said above using and paying off credit is better for your rating.
Martin Lewis has a page on the best deals.
I currently have 2 cards A balance transfer card not used for any spending. A card for using.
I also have a pay as you go credit card which I use for any contact less and small card purchases and paypal. I work on the theory that the fewer places I use my main cards the less chance they get compromised. The payg card never has more the £200 so it isn't a huge problem if it gets compromised.
And as said above using and paying off credit is better for your rating.
As others have said just get a cash back card for daily spend, and another for non fee holiday use (we use Halifax). Set up monthly direct debits to pay the balance off in full and your essentially getting cash back for money you were going to spend anyways.
Amex gave use £278 cash back last year, and so far since Dec already at nearly £50. There is a £25 annual fee, but even taking that into account it is in effect 'free' money on expenditure that was going happen anyways.
Amex gave use £278 cash back last year, and so far since Dec already at nearly £50. There is a £25 annual fee, but even taking that into account it is in effect 'free' money on expenditure that was going happen anyways.
Edited by gangzoom on Wednesday 12th February 15:26
Sticks. said:
I do this. If you can use the deals they are worth 3x face value. Eg a £20 annual railcard costs £6 in vouchers plus £2 cash.
https://secure.tesco.com/clubcard/search-results/a...
Aren't things you buy insured as well?
It normally pays for a couple of ferry crossings to france for us so definately worth ithttps://secure.tesco.com/clubcard/search-results/a...
Aren't things you buy insured as well?
Some of the above re: protection is true. Some of it is BS.
This is also true, from an MIT study;
“A number of studies have indicated that people do spend more when paying with a credit card. In 2001, Drazen Prelec and Duncan Simester of MIT published the results of their research in Marketing Letters. They found shoppers spend up to 100% more when using their credit card to pay instead of cash.”
Credit Cards significantly lower your threshold to go into debt.
Your parents’ advice was not bad. If you want something, save up for it, then buy it (if you want to do it on a CC that’s your choice, but advicry would be to not front-run.
This is also true, from an MIT study;
“A number of studies have indicated that people do spend more when paying with a credit card. In 2001, Drazen Prelec and Duncan Simester of MIT published the results of their research in Marketing Letters. They found shoppers spend up to 100% more when using their credit card to pay instead of cash.”
Credit Cards significantly lower your threshold to go into debt.
Your parents’ advice was not bad. If you want something, save up for it, then buy it (if you want to do it on a CC that’s your choice, but advicry would be to not front-run.
I 8 a 4RE said:
Credit Cards significantly lower your threshold to go into debt.
Your parents’ advice was not bad. If you want something, save up for it, then buy it (if you want to do it on a CC that’s your choice, but advicry would be to not front-run.
What are you on about, no here has suggested actually buying stuff on credit using a credit card. If you set up a monthly direct debit to pay the balance off in full in effect its the same as a debit card.Your parents’ advice was not bad. If you want something, save up for it, then buy it (if you want to do it on a CC that’s your choice, but advicry would be to not front-run.
The advantage of using a credit card is if you choose the right one you can get some half decent 'free' perks. These change with time and how you use them, I use to use a Tesco Clubcard as their point were really generous, got to £300+ worth at one point with double points/spend, Virgin use to do a good AMEX card on which it was very easy to collect free tickets/upgrades. AMEX cash back is the simplest one for us as the moment, but if a better rewards card comes along we'll swap over.
Frankly you have to be no financial sense to actually go into debt on a credit card, especially these days with the crazy headline APR stamped on every statement. But I suppose someone must do, otherwise companies like AMEX cannot afford to offer 1.5% cash back.
Use it like a debit card, pick a rewards card that works best for your situation, whats the problem?
gangzoom said:
Frankly you have to be no financial sense to actually go into debt on a credit card, especially these days with the crazy headline APR stamped on every statement. But I suppose someone must do, otherwise companies like AMEX cannot afford to offer 1.5% cash back.
Amex is traditionally a charge card not a credit card. The 1.5% is paid for by the retailers who get charged by Amex to accept them.Ean218 said:
Amex is traditionally a charge card not a credit card. The 1.5% is paid for by the retailers who get charged by Amex to accept them.
As a consumer do I really care about the difference? It seems to be accepted everywhere, to manage its like any other card I have used, and I can cancel any time.Why would I use a different card that doesn't give 1.5% cash back?
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