Why have a credit card..

saxodan

Well I only have 2 cards, one is a store card I used once to get 10% of then never used again after paying it of in full..

And the other is with my bank and I only use it when I need to e.g. my account goes over drawn and I have no money left! Or if I want to keep purchases separate e.g. my holiday stuff was all on card and paid for when I got back.

Other than that I don't see why people need them?
Anyone tell me why?

Thanks!

Dan

Bokkens

Welcome to MSE,
There are several reasons,if you select cards for a particular purpose then they can be used to your advantage and you can gain extra points,fuel discounts,free gifts,annual rewards,airmiles,and money.
Have a look at the stoozing forum above and see if you are interested in using your card in this way.
The card companies have been paying for our family holidays for the last four years,when you are lying on the beach knowing that the companies have provided the funds for your holiday you cannot help but smile.
Close the store card and start looking for the next bargain,always aim to pay no interest on anything you buy.

saxodan

Bokkens wrote: »

There are several reasons,if you select cards for a particular purpose then they can be used to your advantage and you can gain extra points,fuel discounts,free gifts,annual rewards,airmiles,and money.
Have a look at the stoozing forum above and see if you are interested in using your card in this way.
The card companies have been paying for our family holidays for the last four years,when you are lying on the beach knowing that the companies have provided the funds for your holiday you cannot help but smile.

Makes sense!

Just been reading that section
I shall have an interest free credit card for the next three years or so now anyway!

Student account :beer:

Bokkens

Make sure you do a little research into the cards you think you would like and make sure you set up a DD payment for the monthly amount to avoid those card charges and make sure you have another card lined up ready when your cards 0% period comes to an end.Select a good online saving account to put your money into ,after you have filled up your ISA allowance,watch out for transfer fees on short 0% periods ,interest charges and tax.
If you can dodge around most of those for the whole year you should have a enough cash for a holiday or a damn good day out.
Once you have got the hang of it and credit permitting just scal everything up so that you have multiple accounts and credit cards and then the rewards are also multipled.
Good luck.

lisyloo

Other than that I don't see why people need them?
Anyone tell me why?

Certainly.

1) I get cashback on mine (currently 4% on one) and other discounts e.g. Egg did 75% off airport lounges last year.
2) Credit card company has joint liability for items over £100 if retailer goes bust or there is an issue.
3) Some companies e.g. Nationwide, give you 0% commission on exchange rates, so very useful for purchases abroad.
4) Good for dealing with payment of business expenses as employers pay expenses in arrears.
5) Good for delaying expenses by one month which helps budgetting (otherwise I'd need to keep an unknown amount of cash available as I don't know what I'd spend each month).
6) Good for emergencies when you don't have the cash (like that pair of shoes :-).
7) Better for carrying around than cash (you can make a phone call and stop it if it's stolen).
8) Improves your credit record (if used wisely obviously).
9) Can make money with either cashback or stoozing.

There might be more.

Bokkens

Yeah I agree ,most lisyloo's list it is often over looked and people concentrate just on 0% periods.
point 2 is a useful one as is the 59 days interest free on purchases.(as long as you clear your balance in full each month).

going2die_rich

Isn't it deemed safer than a debit card since you can only use up to your credit limit, compared to your entire account balance from a debit card?

Also don't you get added protection over fraud since the payments aren't actually paid to anyone until weeks later, so it's easier for the company to refund you since they can refuse payment. As I understood it, the shops don't actually get the money their and then when you use it, they have to wait a few weeks before they actually receive it. (Might be wrong but I am sure i read that somewhere at some point).

Grade_A_Reject

lisyloo wrote: »

Certainly.

1) I get cashback on mine (currently 4% on one) and other discounts e.g. Egg did 75% off airport lounges last year.
2) Credit card company has joint liability for items over £100 if retailer goes bust or there is an issue.
3) Some companies e.g. Nationwide, give you 0% commission on exchange rates, so very useful for purchases abroad.
4) Good for dealing with payment of business expenses as employers pay expenses in arrears.
5) Good for delaying expenses by one month which helps budgetting (otherwise I'd need to keep an unknown amount of cash available as I don't know what I'd spend each month).
6) Good for emergencies when you don't have the cash (like that pair of shoes :-).
7) Better for carrying around than cash (you can make a phone call and stop it if it's stolen).
8) Improves your credit record (if used wisely obviously).
9) Can make money with either cashback or stoozing.

There might be more.

I think you've covered most of the benefits quite comprehensively there.

I use point 4 and point 1 to my advantage. Each month I run up work expenses, hotels, flights etc which I claim back in my expenses each month.
I put these on my Egg card knowing I'll have the money at the end of the month to cover the bill and Egg pay me 1% on everything I spend, effectively paying me for lending me their money.

The joint liability came in useful a year or so ago when my ISP went bust and I claimed back the remainder of my up front subscription from the credit card company.

oh...and they're really good for spreading filler into small cracks when you're decorating.

Stephen_Leak

As Martin so succinctly puts it, spending on a credit card isn't bad. Borrowing on a credit card is.

Used cleverly, CCs can actually save you money.

For example, a CC can allow you to snap up that unexpected bargain, which you were thinking about having to save up for.

On top of this, and even for day-to-day purchases (food and petrol) a cashback card can save you at least 1%, and up to 4%, if you. If you couple this with a high interest current account (like Abbey or A&L), your money can stay in the current account, earning 8% pa or 6.5% pa respectively, until you pay the CC bill, by DD to avoid those pesky late payment fees of course.

For any larger and/or unexpected expenses, one of the 0% for 12 month CCs is a good idea.

Finally, for drivers with a convenient ASDA, their CC gives a 2p/litre (2.15% @ 92.9p/litre) discount, which is deducted at the point of sale as well.

patwa_2

Hi, I just wanted to put the other side of the arguement which was partly covered above. Apart from the 'convenience' factor, sometimes you have no choice but to take out credit. for example, my travel expenses are paid in areers, the bill often amounts to £600+ a month, which is money I don't have. Having a credit card allows me to use transport but also wait for re-imbursement to come in so I can pay off the balance. without the credit card I would have to loan from parent and if I couldn't get that due to shortage of money I'd literally be stuck.

The risk as always with a credit card is the false feeling of 'free money', but as long as you can be disciplined you should be OK. Remember that a credit card is at the end of the day a loan and you'll have to pay it back. If you can't afford to spend whatever your credit limit is, then it's probably not wise spending it at all.

H.

lisyloo

if I couldn't get that due to shortage of money I'd literally be stuck

If these are business expenses then surely your employer should help.
In practice most employers expect you to use a credit card, however if that wasn't the case for any reason (such as bad credit history) then in my view it's up to your employer to sort out, not for you to "sub" them for a month or two.

My employer offers 0% cash advances for situations where credit cards won't suffice (such as a long period away without being able to submit expenses).