Credit versus Debit card

bobweston

Hi there,

My bank's customer services advisor has suggested I get a credit card.

Part of me thinks this is a little more than a sales pitch, but I do appreciate what she was saying about a credit card giving better protection for online purchases.

I'm 28, and have always only had a debit card. The reason for this is: I've not had a reason to have a credit card, but mainly because "you hear" stories of people getting into trouble where they owe lots of money, where they treated it as free money & have let the bills rack up. My theory is if you don't have one then you won't have this temptation/risk.

I've been told a Direct Debit can be set-up so the CC bill is paid off automatically each month.

I understand the basic differences between a DC and and a CC (debit versus credit, aka borrowing).

Would anyone be able to give any thoughts on this please.

What are the differences between the different CC packages on offer (ie standard versus Platinum/Gold)?

What are the benefits of a CC over a Debit card?

Are there any useful sites to check CC comparison packages?

Any thoughts would be appreciated. Thanks.

SecLender

There are lots of benifits to a CC over DC

Better protection (online and offline)
Cashback on some cards
0% interest deals on some cards
Improves your credit score

head over to the cards and loans section to compare them http://www.moneysavingexpert.com/cards/

Although if you've never had a CC or any other sort of debt before you might struggle to get one of the better cards. Your bank seems to be keen to offer you one, so they may be a good place to start to build up your credit score.

chattychappy

I have multiple credit cards, but one main current account.

I rarely use my debit card - fraud could cause me real problems even if ultimately it's not my liability. This is exacerbated by long periods overseas.

If a CC gets compromised, well - the problem is contained. (I don't sign DDs either.) I can query it, and deal with it later. The problem is contained.

bobweston

SecLender wrote: »

There are lots of benifits to a CC over DC

Better protection (online and offline)
Cashback on some cards
0% interest deals on some cards
Improves your credit score

head over to the cards and loans section to compare them http://www.moneysavingexpert.com/cards/

Thanks for that reply. Much appreciated.

SecLender wrote: »

Although if you've never had a CC or any other sort of debt before you might struggle to get one of the better cards. Your bank seems to be keen to offer you one, so they may be a good place to start to build up your credit score.

Yes, I understand in the 'current economic climate' credit cards are being issued less frequently. I don't think that's necessarily a bad thing.

Banks/credit card providers can be irresponsible at times, especially when they've upped the limits on people's CC. The psychology here is it encourages people to spend more. Although CC holders can be irresponsible if they treat it as paper money. People can get into trouble when/if they don't keep on top of the bills and start getting into debt.

Yes, my bank does seem very keen to give me a CC. I went in for a chat about my account, and was pitched several services (Home insurance etc)... so it's clear they're acting as a sales business, not solely a service provider. They pretty much had their pen out ready for me to sign the form!

Does anyone know if bank staff get commission for every new sign-up (serious question)?

ses6jwg

bobweston wrote: »

Thanks for that reply. Much appreciated.



Yes, I understand in the 'current economic climate' credit cards are being issued less frequently. I don't think that's necessarily a bad thing.

Banks/credit card providers can be irresponsible at times, especially when they've upped the limits on people's CC. The psychology here is it encourages people to spend more. Although CC holders can be irresponsible if they treat it as paper money. People can get into trouble when/if they don't keep on top of the bills and start getting into debt.

Yes, my bank does seem very keen to give me a CC. I went in for a chat about my account, and was pitched several services (Home insurance etc)... so it's clear they're acting as a sales business, not solely a service provider. They pretty much had their pen out ready for me to sign the form!

Does anyone know if bank staff get commission for every new sign-up (serious question)?

It is unlikely that the branch staff get commission, but get "points" towards a sales target they are expected to hit.

So it is a 2-way business transaction. They are offering you a credit card with the protection and services they can be useful for (See Consumer Credit Act) and in return they gain a small percentage toward a sales target.

Bear in mind that most bank staff use this to supplement their wage as a cashier will usually be on around £12,000 before tax, and an adviser around £17,000 so hardly mind blowing wages.

Bonuses can usually be anything between £0 and £1,500 per quarter.

What you mention about branches is certainly true, although they provide a service they have sales targets to meet also. The aim of branches is to provide "sales through service". It is the same across every single bank and building society though to varying degrees,

bobweston

Thanks for that ses6jwg.

I'd suspected things (banking service) had got increasingly more sales focused. When the bank called me in for a chat, I was suspicious it was going to be a sales pitch to upgrade my account for a fee.

alanq

Avoid using credit cards to make regular payments. These are not direct debits (which you can tell the bank to cancel). With credit cards these payments are taken by means of Continuous Payment Authorities. With those you have to get the payee to cancel and some incompetent or dodgy businesses fail to heed such requests for as long as they possibly can.

chattychappy

alanq wrote: »

Avoid using credit cards to make regular payments.

Personally I have never had a problem and would rather sign a CPA than a DD. People who get into trouble with CPAs often don't understand the rules.

As you say, if you want to cancel, you MUST cancel with the merchant. If they continue to take payments then (and only then) you can dispute it. If you hold proof (preferably in writing) that you cancelled the CPA with a merchant then the CC should refund and the FOS will uphold a complaint if they fail to do so.

bobweston

alanq wrote: »

Avoid using credit cards to make regular payments. These are not direct debits (which you can tell the bank to cancel). With credit cards these payments are taken by means of Continuous Payment Authorities. With those you have to get the payee to cancel and some incompetent or dodgy businesses fail to heed such requests for as long as they possibly can.

Thanks. That does sound a step too far... using a cc to pay for DD.
Seems bad news to me.