Why Use Credit Cards?

Fluffi

moonrakerz wrote: »

It will only be a matter of time before someone is using your debit card number fraudulently. Then you will see the advantages of a credit card !

So true! I never, ever ever hand over my debit card to anyone and always use my credit card because I don't need the hassle of my bank account being emptied of my hard earned cash and hassle that follows trying to get it back while direct debits etc all bounce! At least credit card fraud isn't your money!

And the cashback from credit cards is great too. I've never paid any charges or interest in my life, but earn 1% on most of my spending so in fact I'd be poorer if I didn't have a credit card!

littleowl

rl290 wrote: »

Littleowl, while I am in agreement with your general points, and am massively against how easy it is for people to gain access to excessively large amounts of debt, surely you concede that an intelligent money-saver can do well from credit cards:

1. Protection on credit cards is FAR stronger than on Visa debits. To quote Martin: "The key difference is that when you complain on a credit card under section 75, the credit card company itself is legally liable, with the chargeback it's just about the Visa/Mastercard process and that is no where near as weighty plus you can't go to court"

2. Cashback - I earn 5% cashback on everything I buy with my Amex. Apart from your paranoid remark about it earlier, why is this a bad thing? I pay off the card every month

3. Stoozing - if you are genuinely quite money-savy you can make significant amounts of money from interest free deals...

Now, you describe how you used to get headaches juggling bills etc, which I can understand. However, for those of us who are able to use cards to our advantage without any problems then they can be a real benefit to us. For you though, it seems that you are better off without them..

R

!. Yes, I concede the protection is stronger with a crdit card but that alone would not persuade me that I needed one

2. I wasn't aware I had made a 'paranoid remark' but 5 % does not seem a huge return (unless the monthly expenditure is quite high) and again would not persuade me.

3. I don't think you have quite understood my remark. I said that I last used a credit card many years ago when running a business. I was fairly naive at the time and persuaded by my then bank that it would be almost impossible to run a business without one. However, I eventually realised that this was far from being true and dispensed with it.

I have never used a credit card for personal finance. Budgeting can be performed quite satisfactorily without resorting to borrowing in my opinion. In essence I prefer to pay for what I buy, not borrow to buy it even if that borrowing is for a short time only. The difference I suppose is living with what you already have not what you will have at the end of the month.

Mozette

littleowl wrote: »

I have never used a credit card for personal finance. Budgeting can be performed quite satisfactorily without resorting to borrowing in my opinion. In essence I prefer to pay for what I buy, not borrow to buy it even if that borrowing is for a short time only. The difference I suppose is living with what you already have not what you will have at the end of the month.

I'm paid monthly in arrears, so my spending for October, say, will go on my card in October, be paid out of my salary for October, then I get my cashback in March, generally about £100, which is - to me at least - a nice amount of money.
Obviously if you're minted, then perhaps the odd £100 is not worth bothering with; my view is, I'd be spending the money anyway whether by cash, debit or credit card, so I may as well get a bit of it back.

littleowl

Mozette wrote: »

I'm paid monthly in arrears, so my spending for October, say, will go on my card in October, be paid out of my salary for October, then I get my cashback in March, generally about £100, which is - to me at least - a nice amount of money.
Obviously if you're minted, then perhaps the odd £100 is not worth bothering with; my view is, I'd be spending the money anyway whether by cash, debit or credit card, so I may as well get a bit of it back.

Most of my working life was spent in education and I, of course, was paid in arrear at the end of the month as most people are. Many colleagues used credit cards and, at the end of the month, paid them off and then had to use the card the next month - ad infinitum. I never could see the sense in that. And, inevitably, one or two had a sudden financial crisis and could only pay the minimum amount which led to obvious results.

I am certainly not ''minted'. My views on what I believe to be the evil of credit have not changed whether earning a good salary or, as now, living on a restricted pension income.

Living on credit seems to have become part of our national psyche. All I am saying is that there is a different way and a different point of view.

skyrider007

littleowl wrote: »

I do travel and I do use hotels. I have never encountered a difficulty using a debit card in those circumstances.

I believe that living with credit cards is a state of mind, it is possible not to do so or how would a whole nation manage without them?

Some hotels and car rental will block a certain amount of money from your card limit (or the balance of your account for a debit card) for security deposit. For example, if your hotel costs £150 per night, they may block £450 from your card (which could make you overdrawn) and release them a few days after you have checked out if you did not damage their room. This could cause a lot of problem if you are relying solely on the debit card.

Voyager2002

I think that post #16 says it all, really.

I do agree with the OP that a culture of living on credit has brought a great deal of misery. And the negative side of credit cards is that they make borrowing seem normal and acceptable, even prudent. However, credit cards can be an extremely useful tool for people who use them as a means to spend what they have, rather than to borrow.

Personally, whenever I buy something with a credit card I shift the amount I have spent into an interest-bearing savings account. If there is no money left to shift, I don't spend any more on my cards. Of course, I have direct debits to pay off my full credit card balance every month, and so don't pay any interest charges nor late payment fees. And the interest on the money allocated to pay credit cards, together with the cashback, is a useful supplement to my income.

Belnahua

What about life's little unexpected hiccups?

I needed a major repair to my car, cost nigh on a grand. I put that little bill on my CC and paid it off over a couple of months. (And don't say anything about savings, as they'd been blown buying the car).

So if I hadn't had a CC, I'd now be out of a job, as there is no way I could get to work without a car.

ryandj

If used in the right way - paid off in full every month and not spending more than you can afford - then credit cards are great for the reasons mentioned above. I use an AMEX and a Egg Money card for all my spends to get the cash back, pay it off in full. I also do a bit of "stoozing" which is on Barclay card at the moment, always pay the minimum each month and transfer it a month before the 0% offer ends.

However, these special offers would not be viable for the credit card companies if everyone used the credit cards as I do - they would not make any money.

Mozette

littleowl wrote: »

I am certainly not ''minted'. My views on what I believe to be the evil of credit have not changed whether earning a good salary or, as now, living on a restricted pension income.

Living on credit seems to have become part of our national psyche. All I am saying is that there is a different way and a different point of view.

Yes, credit, or rather debt, can be a bad thing, but why not get cash back on money you are going to be spending anyway, and put the money to pay it off in an interest bearing account until needed? Especially if you're on a tight budget, every little helps, as someone said!

Still, we're all different, so as long as you're happy with what you do; fair play to you.
I would just rather make what money I can out of the banks & cards is all.

olly300

The main reasons why I use credit cards:
1. Buying on the internet
2. Protection against companies going bust

I buy a lot of computer equipment and unfortunately computer suppliers have a habit of going bust. Therefore I pay for it with credit cards because if there is a problem it's not my money it the credit card company's.