Do we actually need a credit card 27 January at 12:29PM in Credit cards 22 replies 1.5K views

BabaYaga101

As the title, do we actually need credit cards to get by? The obvious answer is no, but other than a need for extra funds when the current account is saying no, why do people actually need/use them?

Dave Ramsey for those who watches his videos hates them. He is a firm believer of manual underwriting for big purchases - a house for example, is this a thing in the UK?

MorningcoffeeIV

People have them for S75 protection, rewards such as cashback or points or Airmiles, facilitating cashflow, gaining interest on their own funds, spreading costs, borrowing at 0%, building a credit history, gaining better borrowing offers and because they come in a range of pretty colours.

Jami74

I didn't have credit cards for most of my adult life, got loans/finance etc okay when I wanted, although never tried a mortgage.

Now I use them because they help my budgeting and I benefit from cashback so they save me money.

Will_Riker

As @MorningcoffeeIV says, there are quite a lot of benefits to a credit card, so long as it's managed sensibly.  Problems only arise when people look upon them as a source of "free money", and spend more than they can afford.

An additional consideration - and one that is not applicable to everyone - but very often if you want to book a hotel or a hire car, they will insist on a credit card being provided to enable them to charge any damage, excess fees etc. that are warranted, after you've checked out/returned the car.

MattMattMattUK

I use a credit card for S75 protection, to not have to expose by current account publicly via a debit card and for cashback purposes. I never carry a balance on my credit cards, I never pay any interest or fees.

Looking at this Dave Ramsey character he seems to offer very basic financial "advice" and it seems and often much of it seems to produce sub optimal results (debt snowball method) etc. He is not someone I would be taking any advice from.

Alex9384

For me it's a little bit like a game. I keep building my credit history, increasing my credit limits, regularly do eligibility checks to see if I can get the best offers available. I take advantage of 0% purchase offers and sometimes even money transfer offers.

I did a money transfer from Barclaycard when the fee was 2.6% and I keep that money in Barclays Rainy Day Saver which pays me over 5% interest now.

Why not to use bank's money instead of your own, if you can?

Moreover, having multiple credit cards means having multiple direct debits. DDs are required to get rewards on some current accounts.

blue.peter

I guess that my usage falls under your "cashflow" category. They're a matter of convenience. I use credit cards to buy pretty much everything, then have a couple of consolidated payments to make in the following month.

The statements come a week or so before I get paid, and are then paid off automatically halfway through the next month. By the time I receive my income, then, I already know how much should be surplus and can be transferred to savings. Conversely, in the unusual event that the payments due exceed my income, I know how much to withdraw from savings.

SusieT

I now have a mastercard and a visa. I use each every few months for a tank of fuel so they are seen to be current, but pay off in full as soon as the statement arrives. If I buy anything that may need S.75 I will use them but only if I have the money in the bank to cover it. 

sourcrates

I`m afraid I`m the black sheep here, having got into serious debt with credit cards in the past, about 8 years ago I made a conscious decision never to use any form of borrowing ever again.

I do have a compulsive side to me, which I try to keep under wraps, in the past I have been both a drinker and a gambler, a lethal mixed combination I can tell you, I`ve won and lost fortunes, mostly it was credit card funded, I lost more than I won granted, as what you win is never enough, so nowadays its strictly moderation in everything.

My compulsive side is still there, but stays firmly in the back ground these days, my only foray into gambling is the occasional flutter on the lotto, or a couple of scratch cards, I only ever use my debt card or cash, have no borrowing whatsoever, no overdraft, and no reliance on any financial institution, or there products, I`m totally independent now, and not dependant as I used to be. 

Yes credit cards can be a useful tool for those who can use them with any degree of common sense, I would still not put myself in that category due to my past failures, which I openly admit, its akin to being an alcoholic, it can rear its ugly head at any time and bite you on the backside, so I try to keep that door firmly closed.

So no, you don`t actually "need" a credit card, but for some, they can be very useful, as for others they are the keys to unlock the gates of oblivion, and should be avoided at all costs, turning the former into the latter can happen so quickly, like in the blink of an eye, that`s why I avoid them now.

enthusiasticsaver

They can be useful as a back up emergency fund, to book hotels or cars (some companies insist on them or large deposits) and for the S75 protection.  I don't use ours a lot but I do have two which I use and pay off in full immediately for booking hotels or the occasional tank of fuel for the car.  They are not essential and many do without them.  

daivid

I make a small amount from cashback and stoozing but the biggest draw for me is convenience. With a CCs I can keep many thousands of pounds in my wallet and if I lose my wallet I wait a few days for replacement cards (fraudulent use won’t be on me) any cash in my wallet would be gone for good. All the while my money can be kept in savings; safe and earning interest. A similar effect can work with a debit card except the money has to be moved out of savings before making a purchase.