Credit card or debit card (or cash)

RG2015

For at least 20 years I have used a credit card wherever possible for my expenditure. Before Covid I tended to limit this to payments above £10, but now it is absolutely everything. For the record, I pay it off every month and just find one monthly payment so much more convenient.

Not only is it convenient but I also get cashback on everything I spend, 1% on supermarkets and 0.50% everywhere else. (NatWest Reward credit card).

Many posters here pay by debit card, but other than Chase 1% cashback (on some expenditure), I cannot see why people would choose this option.

Do you pay by debit card and if so why?

grumbler

Are you sure it's 0.5%, not 0.25%?

And no, I don't remember the last time I paid by a debit card.

Bridlington1

I'm with you in that I pay by credit card for pretty much everything, largely for the cashback but also for those wonderful few weeks of earning interest on money that you've already spent and the very easy DDs for bank switching of course. Plus I do not like having money sat in a current account paying a lower (if any) rate of interest than my easy access savings accounts.

I can however see both sides of the argument on this one and if I were playing devil's advocate I would say one of the main advantages of using a debit card would be that many find it easier to budget with debit cards and cash than they would with a credit card as it reduces the temptation to over spend. Plus I would imagine that for those who have run up large credit card debts in the past that they could not afford, credit cards or indeed any form of borrowing would be too risky for them.

Also I imagine there will be some who simply do not have a high enough credit limit to do all of their spending by credit card so have to make some purchases by debit card or cash regardless.

RG2015

grumbler said:

Are you sure it's 0.5%, not 0.25%?

And no, I don't remember the last time I paid by a debit card.

My mistake. It is 0.25%

Wishful thinking I guess.

WillPS

RG2015 said:

grumbler said:

Are you sure it's 0.5%, not 0.25%?

And no, I don't remember the last time I paid by a debit card.

My mistake. It is 0.25%

Wishful thinking I guess.

Used to be 0.5%. In fact at one point they had some rather nice 10% cashback offers month to month (10% at restaurants, 10% on Amazon etc).

Still a very underrated card though IMO, if I could have only one credit card it'd be a contender.

The main reason I see that people choose to use debit cards is for 'budgeting'. I don't get it myself but I suppose if you are inclined to see a credit limit as a slush fund I suppose it is better that way.

I personally, like you, find it way easier and more rewarding to settle my cards monthly.

MalMonroe

After my DRO ended a few years ago, I got into the habit of paying for everything by credit card - the direct debit is set up to clear the balance every month so I know that I have to stick to my budget. At first I was only allowed a 'credit builder' credit card but now I have three 'normal' credit cards. Used in rotation. 

Having a DRO was a big shock to my system but it really helped me get out of debt and stay out. Some people pay by debit card because they simply don't trust credit cards - and I know people of all ages who do that. In my previous financially reckless life, I'd use either debit or credit card but my credit card use went out of control. So I was a bit scared of even applying for one once the DRO was over.

However, during my time of DRO I learned how to keep to a budget - and it wasn't easy at first. Learning to trust yourself is even harder than trusting other people!

Now I understand why Martin always says to pay off the balance in full, which was something that used to be like a foreign language to me. 

I am an advocate for teaching personal finance in all our schools because I really suffered as a result of my lack of financial awareness. I could blame the breakdown of my marriage (my ex was a maths whiz - he handled all the bills) but really it was my own fault. 

Not everyone has confidence when it comes to using credit cards, no matter what incentives they may offer. And I can understand and respect that.

lr1277

I may have to pay by debit card in the future.

I am no longer working regularly, so don’t have a regular income. This means I cannot apply for a new credit card nor can I increase the limit on my existing credit cards.
So if I want something more expensive than my credit limit, I will have to save up then pay by debit card.

I did have the old John Lewis (JLP) card but the card was withdrawn by John Lewis. So I have ‘lost’ that credit facility. In fact JLP doubled my limit even though they knew I was not working. I applied for the replacement but was declined.

My only advice would be if you stop working don’t assume any of your financial products will carry on whilst you have need for them. Then you maybe prevented from getting a replacement product.

RG2015

Thanks for your replies. I realise that I was a bit insensitive not to consider those for whom credit cards either unavailable or presented unwelcome temptation.

General_Grant

I use the NatWest Reward CC for almost all supermarket shopping.

For small spends (less than £2 in a supermarket or £8 elsewere), I use my Co-Op DC (= 2p per spend - I don't pass the monthly maximum number of such rewarded payments).

For everything else my cashback Barclaycard.

Two exceptions:

(i)  In February and March my Co-Op account wouldn't pay out enough DDs unless Halifax took a payment for my Clarity CC, .  So the Clarity CC is used appropriately for small amounts

(ii)  Occasionally special cash back offers might make it more favourable to use a different card.

I keep the Co-Op current account topped up - and, in any case, they would send a text message if I appear to be going overdrawn.

lr1277

In my case, the job loss was forced on me and I chose to run with making money by other means.

I did not think of all the consequences, especially not one where a credit facility (or any financial prodct) was withdrawn and I couldn't get a replacement.

For those who can plan a loss or drop in income, there may be ways to to mitigate that income drop. Though I don't know exactly what those ways might be.

Jami74

RG2015 said:

Do you pay by debit card and if so why?

Mostly credit card now. A bit of Chase debit card if I've got cash available. 

I've only used credit cards for the last 5 years. In the '90's I was travelling and earning/spending paper money in whatever country I was in and when I came back to UK early 00's everyone I knew seemed to be in credit card debt, I didn't understand them so avoided them. I still know people who spend on debit card first and when their money runs out they spend on credit card, they're the same people who have a savings account paying 0.01% interest, say it's too much faff to switch accounts for free money and don't trust pensions. It was only when I properly sorted my finances out a few years ago I realised they were useful tools if used correctly.