What is the point of credit cards if you don't overspend?

zzzt

I use credit cards because:

1. Extra protections and easier to get your money bank if scammed (actually the bank's money and they'll pursue it aggressively).
2. Reward cards. These are pretty crap now, but years ago I used to get 1% or more cashback on every purchase. This basically is like everything you ever buy being 1% cheaper.
   
3. Bank account stability. My bank account is not used for purchases, therefore it just has the salary going in, and then regular direct debits coming out at predictable times with predictable amounts, I will not go overdrawn.
4. Stoozing.Up until recently this wasn't worth it, but with interest rates being higher, it definitely is. I can earn 4-6% interest on my cash whilst paying for everything on a 0% card.

In terms of you paying £36 per year for the privilege, I don't know why you are doing that. I don't pay anything for my credit cards, and I wouldn't take out a credit card that had a fee unless it had some good benefits that I wanted - accounts with a fee should be offering you various features like travel insurance, no-fee usage abroad, rewards etc.

If the benefits of the credit card are not outweighing the cost then you've basically bought a product you didn't need, the only person who can answer why is you. You don't have to have a credit card, and you certainly don't have to have one that's aimed at people with a different lifestyle who will benefit from things you don't do. Why did you take it out in the first place? I've never been in a situation where I bought something without knowing why and then asked people on the internet "what is the point of this".

grumbler

ZZaffy said:

Thank you for all comments but for my life style I am still wondering why I bother with a 123 credit card.
I do not go abroad.  I do not need to build a good credit score. I only spend what I have.
If I cancel the credit card, I wonder if it affects my debit card in anyway such as cash back.
Am I paying £3 a month for my credit card for no advantage to me.  

Stop wasting money on your Santander CC - close it. Your current account won't be affected.
I have two old free CCs paying 0.5% casback, but switched my spending to Chase debit card paying 1%.
For any other CC advantages mentioned above, if you ever need them, apply for some other CC.

Nat190

born_again said:

Nat190 said:

Hi Zzafy,

I don't know the details of the Santander credit card fully.

But I use credit cards this way, use I for all my food shopping, fuel, big purchases etc. I then pay the credit card once the money appears in the balance (usually about 2 days).
For me I do this

1. To build up my credit score, I use credit which looks good and pay it off fully which also looks good.

2. I use it for the rewards, so up until recently the Clubcard credit card worked for me, get clubcard points every time I use it, and by using it for all fuel and shopping it can mount up quite quickly!

Hope that helps!

Why?
You are missing out on the interest free period.
Put the same amount as you spend in a savings acc & then payback before the due date.

Credit score is nothing but a marketing tool for the CRA's. It means nothing to lenders, as they never see it.

True. I've never actually taken the plunge and tried stoozing.

I have a few credit cards where I do utilize the 0% periods (paying over a longer period for large purchases recent wedding and honeymoon etc etc). But this card I'm talking about is purely for the points on everyday monthly spending... Although now I'm wanting to find one that will give me more of a bonus, as clubcard isn't that enticing for me anymore.

Credit score wise you are absolutely right, I just use the score more as a comparison of how I look financially over a period of time. The actual number doesn't mean much to me, it's moreso about the trend.

blue.peter

In my case, using credit cards simply makes my money management a little easier. I could pay cash for everything, but I actually put it all* on to one or another of my credit cards. The card statements comes in a week or so before I get paid. When I get paid. I therefore know exactly how much to put aside to pay the bill off in full a couple of weeks or so later. (I have DDs set up, so payment in full is automatic.) I also know how much to leave for regular bills (water, energy, council tax etc.). I then leave a small amount more in my current account for a haircut and ad hoc purchases. Anything over that can immediately go into savings. On the other hand, on the very rare occasions that I spend more than my monthly income, I know in plenty of time that I'll have to take some money out of savings.

If I get a bit of cashback, that's a bonus. But the main benefit is convenience.


*Except haircuts: my barber only accepts cash.

born_again

ZZaffy said:

Thank you for all comments but for my life style I am still wondering why I bother with a 123 credit card.
I do not go abroad.  I do not need to build a good credit score. I only spend what I have.
If I cancel the credit card, I wonder if it affects my debit card in anyway such as cash back.
Am I paying £3 a month for my credit card for no advantage to me.  £36 per year is not to be sniffed at.
I have asked Santander, and it just gets too complex even for them.
The only thing that could be an advantage is protective cover 75 on purchases, which so far I have never needed to use.

Why not see if they will change it for one of their fee free cards.

Alex9384

MorningcoffeeIV said:

Section 75.
Budgeting 
Cashback.
Building a credit history.
Security.

Only overspend if you want to make the future you poorer.

+ additional direct debits, which can be useful for rewards or required for switches.

NoodleDoodleMan

Brie said:

I use a card for everyday spending to get the cash back.  And don't pay anything for having the card itself. 

I have a Santander 123 card that can be used outside the UK without any fees for foreign currency.  It's also nice to have a way to isolate holiday spending. 

I have a couple of other cards which are only used for balance transfers. 

Finally I have one card that has been used once in 5 years as they cut the available credit on it by 90%.  I was considering closing it but discovered that it gives priority access to booking concerts.  

Except where the ATM imposes a usage charge.

jbrassy

Personally, I use credit cards and pay the balance off in full because (a) they pay cashback, (b) they offer S75 protection, (c) they help build credit history which is useful when applying for a mortgage. 

The Santander credit card you currently have sounds like poor value compared to other offerings. Specifically, I would suggest the Amex Platinum cashback card which has a lower fee (£25 per annum) and higher rate of cashback (0.75%). Alternatively, there's an Amex card with no fee which pays 0.5% cashback.

I would also suggest Barclaycard Rewards for where Amex isn't accepted and for spending abroad (no annual fee, 0.25% cashback, no overseas charges). 

Chase is also a good option (1% cashback up to £15 a month, no annual fee), but it's a debit card so won't come with the benefits of S75 protection and won't help build credit history.

MattMattMattUK

I use credit cards for cashback and security. My debit card never leaves my home, it spends most of it's time in a fire safe. If one of my credit cards are compromised then that does not really impact me, but if my debit card was then my account could be emptied. There is also the benefit of S75, although I have never had to use it. 

I also get 0.5% back on all my spending, which whilst not huge is better than nothing. 

born_again

Alex9384 said:

MorningcoffeeIV said:

Section 75.
Budgeting 
Cashback.
Building a credit history.
Security.

Only overspend if you want to make the future you poorer.

+ additional direct debits, which can be useful for rewards or required for switches.

You can't set up a DD on a credit card.