Credit Card v Debit Card which would you use ?

moneymaker2810

This is a ‘What would you do’ type question and I am just looking for different views.

Lets say you have a normal current account, savings account and 6 Year bond with your bank, you bond is 50k, savings £25k and money in your current account is £2k each month, you have not and will not be overdrawn and therefore no charges, so in effect the bank makes no money from you. The interest rates are 6% bond, 3.5% savings and 0.25% current account.

Now you have a credit card which you use a pay in full each month, but you find the limit is too low to buy everything you need each month so you no longer use it and just use your debit card to buy everything each month, but you keep your credit card open and run the odd purchase through it so it looks good on your credit report.

Now some will say with those levels of savings you do not need or indeed should have a credit card, others will say that you should and purchase everything on it and settle up a the end of the month thereby saving the interest (0.25% in your current account.

My own view is use my debit card as I can use it everywhere anyway and it saves a giant CC bill each month, you simply spread everything out over the month, but would like to know others views.

McKneff

Credit card transactions offer protection against companies who either go bust or you are in dispute with. Anything bought for over £100 is protected, and its called a section 75. Thats the only reason i use a credit card or for emergencies.

TFD_2

A credit card can also be good for budgeting.

I've got a Capital One card - crap APR, but a useable credit limit of £1,600 which I use for groceries, and random payments, usually £300-400 a month, which I pay off at the end of the month when I get paid. This way I know what I've spent on food and stuff, whereas on a debit card it can be hard to see as it gets swallowed up on a statement.

For any larger purchases that wouldn't fit within the available credit, I use a debit card or a different credit card.

Works for me, but obviously everybody finds their own system that works for them.

djm1972

I use a credit card for every purchase I possibly can; on the basis that it's not my money so if the card gets cloned and used illegally I'll still sleep at night. I check every payment on my statement, and assuming everything's OK pay it off in full.

Using the debit card of one's current account for every day purchases these days I think is madness; especially the current account that you rely on for your mortgage and other bills to come out of that. Yes; of course the bank have an obligation to investigate illegal use of your card and ultimately you may get your money back - but sleeping won't be so easy...!

I am never out of the house these days with any plastic card that will cause me any significant personal financial loss if it is cloned. I have a separate cash account with NatWest that has a SOLO card; which I use to get cash out (and keep it topped up via online banking); and a credit card for every other purchase possible.

The debit card of my current account stays safely at home in a draw.

jakesuk

I completely agree, it makes far more sense to purchase everything on a CC and pay off in full.

You don't pay any interest and it makes budgeting easier IMO because you have a cashflow advantage of not having to pay it off for up to 56 days. Of course you need to only spend on the CC what you would have spent on a debit card.

However I don't understand why you make a point that your debit card is a SOLO. What's the relevance of that as opposed to Visa Electron or Visa Debit?

leachyd

So if you use a credit card instead of the debit card, then you're earning a little intrest on the cash in your current account, but use the right creditcard, and you make money on cashback and otehr deals, like the Tesco card that gives you clubcard points for spending on top of the (minimal) intrest from you bank account. If i was in a comfortable position like you, id put everything on tre credit card

djm1972

jakesuk wrote: »

However I don't understand why you make a point that your debit card is a SOLO. What's the relevance of that as opposed to Visa Electron or Visa Debit?

Hardly relevant really; suffice that it's an account that cannot go overdrawn.. that's the important thing; so i'm limiting my exposure to whatever balance I have in there for the purposes of getting cash out.

The fact that it cannot go overdrawn means that even if that card is cloned; i'm not exposed to unauthorised overdraft fees and possible bad markers on my credit file etc...

Stompa

jakesuk wrote: »

I completely agree, it makes far more sense to purchase everything on a CC and pay off in full.

Agreed, the only time I ever use a Debit Card is where Credit Cards are not accepted, but it's a real pain. FWIW I also try to avoid using cash wherever possible.