Credit Card or Debit Card ?

Ryan101

A bit of a dilemma and just looking for everyone else’s thoughts, a bit of a ‘What would you do’ kind of question !.

I have a Lloyds Premier Duo Credit Card (No annual fee as I hold their premier account).

I have £6k in my Lloyds Premier account and just over £16k in Lloyds e-savings.

I am fed up of running up a large Credit Card bill every month, so I would like to keep the credit card for emergencies only, and just use my Lloyds Debit card instead.

I know some people think a Credit Card is better as you get protection if something goes wrong, but all I do is shopping in Sainsbury’s, Buying Petrol, Eating out etc so it’s not like I am buying a Car, or Holiday or 3 piece suite.

My original plan was spend on the credit card, earn the Airmiles and keep the money earning interest in the bank, then once a month the Credit Card gets paid off in full so no interest. But this means a large bill once a month where if I was using my debit card it would be coming off the bank in even chunks throughout the month, it would also be one less bill to pay every month !, and of course the spending would be replaced automatically when my wages went in.

I suppose I would be losing a bit of interest from the savings or current account, but some might think if you have savings you don’t need a credit card, not that I ever paid interest on it as I always paid it off in full every month.

That’s my thoughts anyway, what do you think ?.

Sstripey

Keep the credit card, but always pay off automatically in full.
Be really active in switching cash in and out of instant access savings accounts, so that you have the money ready to pay off the credit card each month.

That's a bit of work to do, but means that you make a little bit of money, and it's only one date per month that yo need to be concerned about.

Le_Pip

If you have internet banking you could either daily or weekly send a faster payment from your current account. It would then function akin to a debit card however you would get the rewards and, more importantly, credit card protection. Also if there is ever fraud it is much better to have a credit card limit used that all your money taken from your account.

I know that if there is fraud they are meant to refund quickly however you would have all the hassle of trying to sort out whilst your bank account has been drained and payments bounce.

opinions4u

I use the credit card for every spend.

I invariably resist frivolous spending.

I earn cashback / points on every transaction.

I pay the bill in full from my savings account a week before payment is due.

Cashback. A bit of interest. One bill a month. It works.

Meadows

You can use a credit card to your advantage by having a cash back/reward card card where all your monthly purchases are done via the card and paid off in full each month, you then gain by getting cash back, vouchers or goods.

Either way no matter if you have a cash back/reward card or a basic credit card you do not have to run up a bill by spending on what you can not afford to pay off in full each month.

Only buy what you can afford to pay back each month, it does not matter how big the bill is (it may also make you look at you spending and think do I need that) as long as you have the funds to cover the balance, does it really matter if you pay as you go bit by bit or one payment each month?

Using the credit can you can have up to 6 weeks from new statement date to due date of next statement payment of balance to pay for your goods - that is 6 weeks the money stays in your account.

I pay for everything on the card, have one bill each month and gain from cash back. We are paid monthly so way not pay for our shopping monthly.

redpete

I see no advantage in paying lots of small amounts during the month rather than one large amount (that equals the sum of the small amounts).

You pay no interest either way, you earn more interest and airmiles with the CC approach, you get additional protection with the CC. A well-managed CC (as yours is) probably looks better on a credit report should you want to apply for a loan or a mortgage in the future.

Seems a simple decision to me.

sfax

redpete wrote: »

I see no advantage in paying lots of small amounts during the month rather than one large amount (that equals the sum of the small amounts).

You pay no interest either way, you earn more interest and airmiles with the CC approach, you get additional protection with the CC. A well-managed CC (as yours is) probably looks better on a credit report should you want to apply for a loan or a mortgage in the future.

Seems a simple decision to me.

Because it's harder to keep track of how much money you have left each month and you might spend too much and go overdrawn when your CC direct debit kicks in. I assume that this is the OP's concern.

I personally use a cashback credit card for absolutely everything (where no surcharge over using a debit card) and pay it in full each month but if you can't be trusted not to overspend and your margins are narrow, it could be risky approach. When the money in your current account runs out, it's game over. When you're doing all your spending on a credit card, you need to be more careful if you don't have much margin for error

fracturedsun

I have a savings account specifically for my credit card spend, each time I spend on the card I transfer that amount to the savings account. This way I don't lose track of what I'm paying, and I have money to pay in full waiting already set aside (and earning interest on top of the cashback/rewards for that month). It is a little bit of a extra work though and you have to be diligent and organised about it so it's possibly not for everyone.

Sstripey

sfax wrote: »

Because it's harder to keep track of how much money you have left each month and you might spend too much and go overdrawn when your CC direct debit kicks in. I assume that this is the OP's concern.

I personally use a cashback credit card for absolutely everything (where no surcharge over using a debit card) and pay it in full each month but if you can't be trusted not to overspend and your margins are narrow, it could be risky approach. When the money in your current account runs out, it's game over. When you're doing all your spending on a credit card, you need to be more careful if you don't have much margin for error

I agree it's more risky, but it's now easy to check online how your balance is, or there's the old fashioned way of keeping records!:)

jonesMUFCforever

OP - check out Vantage account for your Premier current account.
Also an ISA will pay more interest than an e-savings account.
Finally make use of the points you accrue by using your Duo cards.

simongregson

You are currently using your credit card in the ideal way. You get rewards (airmiles) and pay no interest. Instead you earn a bit extra on your cash until the bill arrives.

The only reason to use your debit card is if you feel you can't trust yourself not to overspend.

However, it doesn't sound like this is a problem for you. It must only take a couple of minutes to pay the bill once a month using online banking.