Is it important/worth having a credit card or better to use a debit card abroad?

the_learner

Hi, I currently have a Barclays account which I opened when I relocated to UK. I only have a debit card and I am 30 years old.

I will probably apply for a mortgage in the next 2/3years to buy a house here in UK so I wanted to ask you if, based on your experience, do you think it is important to apply ASAP for a credit card in order to have some credit history in 2/3 years to apply for a mortgage.

My goal is to use the card mainly for small payments (in total less than 500£/month) in UK and other European countries (France, Germany and Italy in particular).

I see that Halifax Clarity is the best pick for spending abroad, but I have read somewhere on MSE that using the credit card for spending is usually discouraged as it gives lender the bad impression about your money management ability.

So I am considering if it is worth having such credit card or if it is equally convenient to have a debit card that can be as competitive as the Clarity abroad. Amongst the various debit card, it seems that Metro Bank offers the best solution (free of any charges in Europe and FX rate that is determined by Mastercard, like the LCarity card).

Thank you for any advice.

grumbler

the_learner wrote: »

Hi, I currently have a Barclays account which I opened when I relocated to UK. I only have a debit card and I am 30 years old.

I will probably apply for a mortgage in the next 2/3years to buy a house here in UK so I wanted to ask you if, based on your experience, do you think it is important to apply ASAP for a credit card in order to have some credit history in 2/3 years to apply for a mortgage.

A recent thread: Do I need a credit rating to get a mortgage?

My goal is to use the card mainly for small payments (in total less than 500£/month) in UK and other European countries (France, Germany and Italy in particular).

I see that Halifax Clarity is the best pick for spending abroad, but I have read somewhere on MSE that using the credit card for spending is usually discouraged as it gives lender the bad impression about your money management ability.

Do you mean for cash withdrawals?

So I am considering if it is worth having such credit card or if it is equally convenient to have a debit card that can be as competitive as the Clarity abroad.

It's good to have it, but you are unlikely to get accepted if it's your first credit card. Start with something more basic, e.g. Aqua Reward that pays 0.5% cashback and doesn't charge extra for purchases abroad.

the_learner

Thanks for your answer. My usage abroad would mainly be in terms of withdrawals rather than payments. That's the reason why I was in doubt if a credit card would be the right tool to have or if it is worth to have it just to build a credit history.

chattychappy

I spend alot of time overseas. I use Halifax Clarity and Santander ZERO (no longer available) for cash withdrawals, and PO Mastercard and Nationwide Select (you need a NW current account) for purchases.

All 4 are credit cards with zero loading on purchases/cash withdrawals. Clarity/Zero are fee free for cash. On cash you pay interest from the date of withdrawal.

So when I need cash, I use Clarity/Zero and pay by bank transfer a day or so later. (I use my laptop on WiFi). I pay just pence in interest. For purchases I use PO/Select and benefit from the usual "up to 56 days" interest free.

As a further backup for cash abroad, I use Barclaycard. They will charge 2.99% loading, but there is no fee and it is treated like a purchase (ie up to 56 days interest free). This is rather unusual.

I DON'T use debit cards. By using Clarity/Zero I'm paying almost nothing to use CCs abroad, and if something goes wrong, it is not my current account that is messed up. I have many CC accounts, but only one (main) current account. I need my debit card with a card reader to perform online banking so can't afford to lose my debit card. Most debit cards will charge you for foreign usage, though there are exceptions. I don't want to change my current account just for free debt card withdrawals overseas. Plus whatever you do, one card isn't really enough because cards tend to get blocked overseas.

So yep, go for CCs. It will also help build your credit history - though some will say too many cash advances is a bad thing. (Never been a problem for me, I think it depends on other factors.)

manami_mnm

Maybe you would like to open a separate current account and use the debit card linked to it when you travel so you can have some protection against unauthorized withdrawals.