Credit vs debit

Smvthephotoman

Hi all. I intend to browse the pages and search but I wanted to ask for opinions about using a credit card for daily purchases. I’m in a lucky financial position that I have ample funds to be able to use a credit card as my primary spending card and then pay the balance off IN FULL at the end of the month. I feel like this allows me to have better consumer protection and fraud protection by using the credit vs the debit but I’ve also seen opinions that due to chargeback both are fairly equal these days. My credit card isn’t a cashback one so it’s just for added protection really. Am I gaining anything by using it as my primary and even if there’s not a lot of difference between the two is there any reason to stop using it?

SiliconChip

Get a cashback credit card, it doesn't matter what the interest rate on it is if you're certain you'll pay it off in full every month. I use the Lloyds Ultra as my primary spending card at the moment for the 1% cashback.

Smvthephotoman

https://forums.moneysavingexpert.com/discussion/comment/81985012#Comment_81985012

I have been thinking about one of those but you have to spend so much to get what I consider a relatively small reward. I use Monzo so depending on the retailer I can sometimes get really good cashback through the app and that does work with the credit card.

Newbie_John

There is a lot of little benefits that add up:

- cashbacks

• savings, let's say you spend £1000 a month on credit - you can put your £1000 to savings account 4% and pay off credit card with next salary earning £40 a year
• helps with credit scores
• Needed for car rentals
• some cards have additional perks like great exchange rate abroad
• some cards like Amex have occasional offers
• variety of other types like free spend for a year and balance transfers that help with stoozing - in case of £1000 spent a month it could increase interests to £400 etc.
• I find credit card easier with chargebacks etc. even if money is lost for some days - it's not mine

Ive got Amex for offers, Chase credit card for free 15 months spending (so I can balance transfer later) , Virgin credit with £10k free balance transfer for 36 months - £10k is earning 4.5% interests in the meantime and also old credit card for day to day spend earning some low 0.5% cashback :)

Smvthephotoman

https://forums.moneysavingexpert.com/discussion/comment/81985036#Comment_81985036

Thanks. There are certainly some good benefits to it as you’ve shown. I’ve thought about that idea of living what I owe to savings, a basic version of stoozing I believe. My Monzo card doesn’t have a lot of fancy features but it does allow for 3 months interest free for purchases over £100 plus the app is great. I have a NatWest credit card too but that’s a rubbish one to be honest. Had that for years.

Enzo_L

https://forums.moneysavingexpert.com/discussion/comment/81985015#Comment_81985015

The rewards may seem "relatively small" but they're on money you're spending anyway and not getting any reward from at the moment.

It's basically free money for nothing.

maman

I spend on a credit card for everything. PreCovid I used cash for small spends but now it seems OK to use a card for anything, so I do.

I have a Lloyd's Ultra card and will use it for the year and then see what's available.

I avoided Amex because it's not generally accepted.

sausage_time

https://forums.moneysavingexpert.com/discussion/comment/81985048#Comment_81985048

This is a good place to start if you are looking for cashback or other rewards.

https://www.moneysavingexpert.com/credit-cards/best-credit-card-rewards/

hugheskevi

The big benefit to using credit cards is building up large 0% debt balances, with the money saved being used to generate returns.

That involves using a 0% purchases card, which sometimes gives a sign-up bonus through sites such as Topcashback or Quidco, When full or at the end of the 0% offer, use a nil-fee, 0% interest balance transfer card, which again might come with a sign-up bonus. Unfortunately, nil-fee, 0% balance transfer cards are becoming a bit more scarce, with the Natwest group being the best source for a while now.

The money saved can be used in savings, maybe Regular Savers that have higher interest rates, else cash ISAs. As long as funds will be available to meet repayment liabilities, all is good, with it being prudent to assume that balances will not be able to be rolled over until they actually are.

Over time large 0% balances can be built up - for the last 15 years I've usually had balances of between £50,000 to £90,000 across my wife and myself, usually with about 5 credit cards each at any given moment. At 4.5% interest, that is an easy few thousand pounds every year.

The Amex rewards are good every to exploit at times, especially when your card usage is high and you can reduce it by using the Amex card as that will be repaid in full for a while rather than increasing balances. Once you have high balances, monthly minimum repayments will be high, so usage will come down quite quickly if not being topped-up.

As all the cards are for limited periods (typically 12 months), they are a good source of Direct Debits to use with a donor current account to switch current accounts to harvest the sign-up bonuses. Be sure to keep a track of switch dates to ensure you know when you qualify for future offers.

It might seem burdensome, but it is just a bit of record keeping and admin, and in return you get several thousand pound every year.

SacredStephan

Get yourself a cashback credit card and set up the DD to pay in full every month. Free money, not taxable, no need to report it to HMRC.

Smvthephotoman

thanks for all you’re responses. Thing is that compared to most my spending is fairly low. Figures like the 50k above is astonishing. I’m spending maybe 600-800 a month on the credit card and paying off in full at the end of every month. The amount of cashback I can earn on spending like that is fairly small and yes it’s better than 0 but hardly worth it. I have many cashback apps I use such as top cashback, Quidco, airtime and ive revebrly added jam doughnut. They offer significantly higher percentages and I can still link all my cards to them or the ones that use gift cards I can pay for using credit. If there’s really not much difference between the two methods and I’m capable of paying off in full every month and keeping on top of the admin side then I guess there’s no downside to using credit, maybe not too much of an upside either but definitely not a downside.