HELP, naive on Credit Cards

Frugality_2

Hi MSE helpers,

I'm 23 and have a new job. I have been investing all my spare cash straight into my ISA, I have a debit card but never had a Credit Card.

I keep getting mithered to take up a credit card with my bank, Lloyds, the current offer is 19.9% APR.

My Dad says don't bother, because I have a stable income and good spare cash to put into savings, Credit cards are for people who need to borrow some money and then repay it.

But, why do rich people carry credit cards??? It's confusing me, why do wealthy, well-off people have credit cards if it's only for those who want to borrow short-term.

HOWEVER, I've thought a bit about it. Why not, invest every single penny I get paid (on the monthly day) straight into my ISA/Savings, THEN live off my credit card, but being disciplined enough to make sure I am on top of repayments in time to avoid the interest levy (3 month interest free, the recent offer)..

..Any advice/general help..?

LeeSouthEast

If you pay it off every month, it gives you convenience of a 56-day (ish) interest free loan. Pay it off in full every month, you will never be charged interest (so APR becomes irrelevant). It builds credit history (very very important).

Get a reward card if your salary allows - e.g. Amex Platinum will pay you cashback so everything you buy on it works out cheaper than the till price!

Frugality_2

Right, so the 3-month interest free still needs to be paid off every month?

McKneff

There is always the case for insurance against buying something and the company going bust.

Should you buy something for over £100 and you have a dispute with the company or they go belly up you can claim from the cc company, this is called a section 75.

As LSE says it builds up your credit rating for the future, you'll presumably be getting a mortgage etc in the future.
But set up a SO to pay the balance off every month and you cant go wrong.

Frugality_2

I thought a SO was fixed, so my limit now is only 1k, if I spend £340 what do I make my SO...seems like a bit of hassle when I could do it manually.

Smiffy74

Frugality wrote: »

Hi MSE helpers,

I'm 23 and have a new job. I have been investing all my spare cash straight into my ISA, I have a debit card but never had a Credit Card.

I keep getting mithered to take up a credit card with my bank, Lloyds, the current offer is 19.9% APR.

My Dad says don't bother, because I have a stable income and good spare cash to put into savings, Credit cards are for people who need to borrow some money and then repay it.

But, why do rich people carry credit cards??? It's confusing me, why do wealthy, well-off people have credit cards if it's only for those who want to borrow short-term.

HOWEVER, I've thought a bit about it. Why not, invest every single penny I get paid (on the monthly day) straight into my ISA/Savings, THEN live off my credit card, but being disciplined enough to make sure I am on top of repayments in time to avoid the interest levy (3 month interest free, the recent offer)..

..Any advice/general help..?

Hiya,

This is the way I do it.

I have a reasonalby good job, but tend to pay for everything on credit card. It's controlled spending though as I always set myself a limit on how much I can spend each month.

Having a credit card is good for your credit rating, but should be managed carefully cautiously as it can be tempting to buy things that you can't afford or spend more than you earn.

Frugality_2

OK cheers.

So I should get one anyway. Becuase on pay day, if I make sure my CC is paid off and then shove all the rest straight into savings, it can start earning me interest rather than waiting until the end of the month to see what I have spare and then playing with that. So I'll use my 1,000 allowance as my spending.

I'll open one up then.

iolanthe07

It's virtually impossible to hire cars (especially in the US) without a credit card, and having one makes other aspects of travelling much easier too.