What are the advantages of a credit card?

Jlawson118

I'm nearly 20 and I do have a credit card, but please allow me to explain why I'm asking this.

So I know credit cards kind of work as a loan, and one of the benefits of having one is that you can borrow money as such, and then pay it off the next month when you get paid or whatever. But is that it? Although I really like the idea of reward cards, I feel like they have more of a purpose.

The thing is, I've been looking at credit cards for around a year now and after being rejected for a rewards card I wanted, I was accepted for an Aqua card February this year. I felt like the only benefit I was getting from this, was building my credit limit, and even then it puts it down according to my record. I'd buy little things on it and then pay it off as normal. However, around a month later, I did get accepted for the rewards card that I wanted, after I changed my details slightly. But in terms of the Aqua card, I kind of never got the point in it, apart from the first point I raised about loans.

The card I have is the Lloyds Avios and my everyday spending earns me points to put towards flights, hotels and/or experiences with Avios. I think earning rewards for spending is a good idea, and I've never seen the point in credit cards without rewards..

Now the reason I'm asking this is because I've recently applied for a Halifax Reward Current Account, and once I've been with them for a few months, I'm thinking of applying for the Halifax Clarity credit card. I will still use my Avios card for everyday spending, but I like the idea of the free cash withdrawals with Clarity as it will come in handy for quick cash withdrawals if I don't have enough on my debit card, and I don't have to spend time doing a quick transfer over..

But what other benefits do 'normal' 'non-reward' cards offer?

Cornucopia

You seem to be well-informed already.

- All credit cards, used responsibly, have the capability to improve one's credit worthiness.

- Different cards have different characteristics in terms of approval.

- Different cards have additional features such as rewards, incentive interest rates, etc.

The Clarity card looks to have some useful features, however, the fee-free cash withdrawal attracts interest immediately, so isn't the generous offer it may appear.

Nebulous2

The main use is just as you have identified for spending without paying for it now. Many people set out to pay it off every month, then have an unexpected bill, decide sod-it and go for an unplanned meal, then quickly find they have a debt of several 1000 and no painless way to repay it.

Then there are people who play the system and take advantage of that to profit from it. Take a look at the stoozing forum on here.

CLAPTON

Jlawson118 wrote: »

I'm nearly 20 and I do have a credit card, but please allow me to explain why I'm asking this.

So I know credit cards kind of work as a loan, and one of the benefits of having one is that you can borrow money as such, and then pay it off the next month when you get paid or whatever. But is that it? Although I really like the idea of reward cards, I feel like they have more of a purpose.

The thing is, I've been looking at credit cards for around a year now and after being rejected for a rewards card I wanted, I was accepted for an Aqua card February this year. I felt like the only benefit I was getting from this, was building my credit limit, and even then it puts it down according to my record. I'd buy little things on it and then pay it off as normal. However, around a month later, I did get accepted for the rewards card that I wanted, after I changed my details slightly. But in terms of the Aqua card, I kind of never got the point in it, apart from the first point I raised about loans.

The card I have is the Lloyds Avios and my everyday spending earns me points to put towards flights, hotels and/or experiences with Avios. I think earning rewards for spending is a good idea, and I've never seen the point in credit cards without rewards..

Now the reason I'm asking this is because I've recently applied for a Halifax Reward Current Account, and once I've been with them for a few months, I'm thinking of applying for the Halifax Clarity credit card. I will still use my Avios card for everyday spending, but I like the idea of the free cash withdrawals with Clarity as it will come in handy for quick cash withdrawals if I don't have enough on my debit card, and I don't have to spend time doing a quick transfer over..

But what other benefits do 'normal' 'non-reward' cards offer?

at age 20 the main benefit is that it starts to build a credit histroy which may be useful when you want to apply for a mortgage

best always to pay the totalin full and don't use it as a loan

if you can get a card with benefits then that's a bonus

however depending upon your life style and jobe etc then the following may be useful

section 75 protection
booking hotels
booking flights
paying business expenses (petrol / hotel bill ) before the compnay re-imburses you
car hire
paying holiday expenses rather than carrying a lot of cash

Ebe_Scrooge

In addition to the above - very useful - information, I'll add one thing. A CC can be a useful way of borrowing money short-term. I'm hesitant about saying this, because a CC is generally a very expensive way of borrowing. And yes, you really should be paying it off in full every month. But let's say you want a new TV, or washing machine, or whatever. There's a special offer on at the shop. You can't afford it all in one go, but you CAN afford it over 2 or 3 months. Yes, of course you really should have saved up to buy it. But ... as long as you're sensible, and have PLANNED the purchase and repayments, and factored in the interest, then it's much cheaper than taking a loan over 2 years.

The APR on cards is much higher than a loan from a reputable lender, so beware. And I would absolutely NEVER advocate using a card to buy something you can't really afford. But for the very occasional - and I stress again, PLANNED - purchase, it can be a relatively cheap and useful tool. But if you can't pay it off within ( I would say ) a 3 month window then forget it, you can't afford it.

As others have said, the main advantage is the S75 protection, and the building of credit history - which requires you to pay in full every month. If you get some sort of reward on the card (airmiles or whatever) , then that's a bonus.

Jlawson118

Cornucopia wrote: »

You seem to be well-informed already.

- All credit cards, used responsibly, have the capability to improve one's credit worthiness.

- Different cards have different characteristics in terms of approval.

- Different cards have additional features such as rewards, incentive interest rates, etc.

The Clarity card looks to have some useful features, however, the fee-free cash withdrawal attracts interest immediately, so isn't the generous offer it may appear.

Thank you for your response, may I ask about the clarity card? Halifax's offer claims 0% on cash withdrawals, or are there still charges?

PeacefulWaters

Jlawson118 wrote: »

Thank you for your response, may I ask about the clarity card? Halifax's offer claims 0% on cash withdrawals, or are there still charges?

Interest on the cash withdrawal. The 0% applies to overseas transaction fees.

Jlawson118

PeacefulWaters wrote: »

Interest on the cash withdrawal. The 0% applies to overseas transaction fees.

Oh right, thanks a lot! I didn't realise it meant that

ged1980

Jlawson118 wrote: »

I'm nearly 20 and I do have a credit card, but please allow me to explain why I'm asking this.

So I know credit cards kind of work as a loan, and one of the benefits of having one is that you can borrow money as such, and then pay it off the next month when you get paid or whatever. But is that it? Although I really like the idea of reward cards, I feel like they have more of a purpose.

The thing is, I've been looking at credit cards for around a year now and after being rejected for a rewards card I wanted, I was accepted for an Aqua card February this year. I felt like the only benefit I was getting from this, was building my credit limit, and even then it puts it down according to my record. I'd buy little things on it and then pay it off as normal. However, around a month later, I did get accepted for the rewards card that I wanted, after I changed my details slightly. But in terms of the Aqua card, I kind of never got the point in it, apart from the first point I raised about loans.

The card I have is the Lloyds Avios and my everyday spending earns me points to put towards flights, hotels and/or experiences with Avios. I think earning rewards for spending is a good idea, and I've never seen the point in credit cards without rewards..

Now the reason I'm asking this is because I've recently applied for a Halifax Reward Current Account, and once I've been with them for a few months, I'm thinking of applying for the Halifax Clarity credit card. I will still use my Avios card for everyday spending, but I like the idea of the free cash withdrawals with Clarity as it will come in handy for quick cash withdrawals if I don't have enough on my debit card, and I don't have to spend time doing a quick transfer over..

But what other benefits do 'normal' 'non-reward' cards offer?

How do you mean changed your details slightly?

LuSiVe

fnv74 wrote: »

Credit card [STRIKE]makes you[/STRIKE] spend before you have money. You can have debts. It is better to use debit cards

'Could encourage you to'

On the other hand you could be spending money that you have that's in a 5% interest current account. And it gives you protection when spending on it. And if the card details are compromised it's not your money they're spending.

It's about control and discipline.

Stevie_Palimo

If you want money on them then never use a cash point machine always get cashback on a purchase.