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

wiseonesomeofthetime

born_again said:

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.

I don't think Alex9384 is suggesting that tbh.

Fingerbobs

Just to throw my view in, as someone who has been a credit card user basically my entire adult life (got my first Student Barclaycard back in 19mumble) I can't imagine life without one now. 

I first got one purely for convenience of paying. Much simpler than faffing about with cash or cheques. But I quickly upgraded to one that gave me perks for spending, and since then I've always had one that gives some sort of cashback. 

In the early days I used to pay the statements by sending off a cheque in the post! Now it's even simpler, all done by Direct Debit. 

I've never spent money I don't have. Always paid the entire balance in full every month (unless on a 0% promo), and never paid a single penny in interest (apart from one minor goof many years ago which I won't go into, but was entirely my own fault!) 

I only use a different payment method where the merchant doesn't accept credit cards, or there is some other penalty for using one (which is rare these days). All utilities and council tax are paid monthly by credit card (with a Direct Debit set up as well as a fallback in case I forget to make the payment). 

The Cashback on my Barclaycard for last year was well over £100. That's free money just for paying for stuff on my credit card! What's not to like? 

blue.peter

born_again said:

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.

I rather think that he meant DDs to pay off the credit card, which can be beneficial in relation to the current account from which they're paid.

blue.peter

Fingerbobs said:

Just to throw my view in, as someone who has been a credit card user basically my entire adult life (got my first Student Barclaycard back in 19mumble) I can't imagine life without one now.

Student Barclaycard? I didn't know that there was such a thing. I was a student when I got my first Barclaycard, in late 1977. That was the ordinary variety, the same as my father's, and did double duty as a credit card and cheque guarantee card. The card number only had 13 digits, not the 16 that's been the norm for many years.

th081

While there are some benefits to credit cards, fraud protection, section 75 etc. I think that collectively the UK consumer would be vastly better off without credit cards. While some manage them well overall lots do not (Inc me) with credit companies taking something 150 million a day in interest payments. 

If you think about it the zero BT deals and zero MT deals are just a way to hook you in and gouge you on interest. 

safe_hands2

I think you need to know what your relationship is with money and spending. Someone I know spends everything he has, so I wouldn't recommend he gets a credit card. I like using one so I don't have to keep watching my current account to make sure I don't go overdrawn. I'm not a big spender but there are those months when big bills come in. I just pay it off at the end of every month and can contribute to that from savings of need be. Add s.75 and some measley cashback, it works for me.

twopenny

I was advised to use one by an accountant friend to build up my credit score. I thought it was nuts till I tried to buy something or change energy suppliers. Some of that has changed these days.

There are so many reasons they can be useful.

Building up your credit score so should you find a time when things are going pear shaped you can use a cc to deal with that immediately rather than wait to buy (repair) and stretch your money.

I got one for travel - in case of an event like the Iceland volcano where people had to make their own way home or pay to stay till airlines were running again so needed good borrowing power as insurance doesn't cover this.

I may need one shortly, moved before covid and haven't been able to get work done on the house but it's the same time the heating/car/bathroom and ill health came together so a zero percent one while leaving and gathering interest in my savings over that time so I come out ahead.

I've used the Argos one for much the same reason while there is good interest on money. 6mts to pay is six months income from savings.

On the down side I've used them in years gone by to cover a time when income was delayed for some reason and trying to pay them off can keep you constantly broke for longer than you think. ie you get paid, a lump goes towards paying off the card.

th081

I personally think the FCA should do something similar to overdrafts and look at how to reduce credit interest paid by people. Maybe make minimum payments higher say 5% or 10% per month plus interest. 

Fingerbobs

blue.peter said:

Fingerbobs said:

Just to throw my view in, as someone who has been a credit card user basically my entire adult life (got my first Student Barclaycard back in 19mumble) I can't imagine life without one now.

Student Barclaycard? I didn't know that there was such a thing. I was a student when I got my first Barclaycard, in late 1977. That was the ordinary variety, the same as my father's, and did double duty as a credit card and cheque guarantee card. The card number only had 13 digits, not the 16 that's been the norm for many years.

In the mid-1990s there was! Mine changed into a normal Barclaycard, presumably when I finished my studies, then I closed it a few years later when they introduced a £10 annual fee. By that time I was already using a Goldfish card which gave me "cashback" in the form of money off my British Gas bill (which was as good as cash really because I would've had to pay the bill anyway). My first card that gave me actual cash back was a Nationwide Gold card, opened in 2005.

The best cashback rates I've had were 3% on all spend (Aqua Reward card, opened in 2012) and 4% on supermarket and fuel (Luma card, opened in 2013) - both pretty short-lived.

inthezeroroom

There is no point, just enough gimmicks to make you feel like you’re winning. Most people do credit cards wrong; in fact, lenders bank on it.