Do we actually need a credit card

[Deleted User]

enthusiasticsaver said:

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.  

Now personally I'd strongly disagree with this, as to me an 'emergency fund' should come from cash. Using a CC for an emergency fund is just going to take said individual deeper into debt at a time thing are not going too well, hence the need for said emergency bail out.. 

molerat

Deleted_User said:

enthusiasticsaver said:

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.  

Now personally I'd strongly disagree with this, as to me an 'emergency fund' should come from cash. Using a CC for an emergency fund is just going to take said individual deeper into debt at a time thing are not going too well, hence the need for said emergency bail out.. 

A credit card allows you to access that emergency fund immediately and you then have up to 56 days to move the money around.  Also people are worried about having their bank accounts raided.  If someone accessed my current account they would likely get away with £150 yet I have instant access to around £30K which I can cover with money safely squirrelled away elsewhere. Many people should not have a credit card in the same way as many should not be allowed into a cake shop or anywhere near a gun.  It is all about self control and taking responsibility for your own affairs and actions.  Just because some people are unwilling to take responsibility for their own actions, it is always someone else's fault, does not mean that credit cards are evil. People who "need" a credit card should not be allowed one.

CSH1

I use a credit card for the rewards, extra protection for larger purchases and so I don't have to put my bank card details on shopping websites, it would be far more inconvenient if my bank card was hacked than my credit card.

MEM62

They are a useful tool, particularly when travelling.  I could probably live without one but I have no reason to.  

MalMonroe

Hi, I've been in extremely dire financial circumstances in the past and ended up with a DRO. During the six years it was on my credit reports I had time to think and learn how to budget without having any 'cushion' or overdraft. Before the DRO I had no fewer than 6 credit cards and 2 store cards. All containing large balances - and I had a large overdraft to boot.

When the DRO ended I was allowed a 'credit builder' card and I listened to Martin Lewis and read what he said about money and how to manage it. 

Now I have four credit cards and manage them sensibly because I am terrified of ever getting into such financial difficulties again. My old attitude towards cards was 'extra money'. Now it's 'getting into debt'. Never, ever think of credit cards as 'extra funds' because that is not what they are.

You said "but other than a need for extra funds when the current account is saying no" - and I say, listen to that current account and also say no yourself. Because that way disaster lies.

If I know I cannot afford to pay any balance in full, then spending on a credit card is a no-no. I only use one at the moment and the others are 'frozen'. I use a credit card regularly but it's only for general spending such as groceries that I know will be paid off in full at the end of every month. (That is how my direct debit is set). And also, for Section 75 protection, should it ever be needed. Once, it was needed and I was very glad I had used my credit card for that particular purchase.

Using a credit card regularly and clearing the balance every month isn't harmful for credit reports as it illustrates to lenders that you are in control of your own spending habits. Very often those who don't have any credit cards can find it difficult to access other lending, mortgages, etc. but if you don't want any, then you probably don't need credit cards.

As Martin says, 'pay off the balance IN FULL every month'. In my old life, I never could because my debt was too high.

Now I'm older and wiser but I wish I could have woken up a lot sooner. 

enthusiasticsaver

Deleted_User said:

enthusiasticsaver said:

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.  

Now personally I'd strongly disagree with this, as to me an 'emergency fund' should come from cash. Using a CC for an emergency fund is just going to take said individual deeper into debt at a time thing are not going too well, hence the need for said emergency bail out.. 

I said back up emergency fund as in immediate access whilst you shuffle money around not instead of cash.  Some banks take a few days to move cash from savings into current accounts.  It is useful to have as an immediate emergency credit facility if you are abroad and need to pay out for something.  I don't have debt but do have a credit card as a back up as our emergency cash is in savings accounts. Not everyone is going to get into debt simply because they have a credit card. 

adindas

Deleted_User said:

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?

Use it in the wrong way such as to add more debt that you already have and struggle to pay you might be ending up on the spiral debt trap. Use it in the right way there are a lot benefits, for using Credit card

Method of payment with S75 protection for relatively large purchases

Cashback

Sometimes, perks with free travel insurance, zero fess for purchasing in foreign currencies.

Pay for the item you will buy anyway, you get interest free at least a month. More benefit if you use zero interest on purchase for a prolonged duration of time.

The big benefit is for arbitrage activities to get free money from stoozing.

So imo Yes, people will still need credit-cards.

EssexHebridean

Deleted_User said:

enthusiasticsaver said:

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.  

Now personally I'd strongly disagree with this, as to me an 'emergency fund' should come from cash. Using a CC for an emergency fund is just going to take said individual deeper into debt at a time thing are not going too well, hence the need for said emergency bail out.. 

If my fridge freezer dies tomorrow, I will be taking out my CC and purchasing the replacement using that. 
I will then, once that payment it through on the card, be transferring the money from my emergency fund to cover it. 
I get S75 cover on the purchase, and will pay no interest.

My emergency fund is indeed cash, but that absolutely doesn't mean that I should only use the "cash" to access it! 

there is also a place for a credit card to be used in a situation where someone does not for whatever reason have an emergency fund in place, and where the spend is absolutely vital. In that case it should either be cleared away to a fee free BT card ASAP, or if that isn't possible, paid off as fast as possible. In some cases though, using an existing CC can be a better alternative than someone potentially being drawn into an expensive payday loan. 


On the subject as a whole - Martin has recently said that credit is like fire - used well, it can be an invaluable tool. Used badly - it will burn. An excellent analogy. 

NoodleDoodleMan

Deleted_User said:

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?

Why is that the obvious answer ?

MrFrugalFever

I use my CC’s for absolutely everything I can (points/cashback/fx free). Can’t remember last time I used a debit card now, probably about 1 year 4 months ago