is there any reason to have a credit card?

want2bmortgage3

i'm trying to streamline my finances, now i am living in my own place and have a regular income. so i basically have one bank account where my mortgage is taken from as well as all bills set up on DD's. i've set them all to come out on the 1st of the month and i get paid weekly.

it seems that the main reason for a CC is for cashback. but i will only be spending £100-150 a month which can't work out as a lot of cashback. i've also heard that you have to wait for cashback so it seems hassle, which i dont like.

the only reason i can think to have a CC is so that all my monthly spending appears as one payment on my bank statement, if i pay the balance off in full with a DD. Ive heard that theres better purchase protection with a CC too.

So guys do you think I should use a CC or just use my debit card for things like shopping, fuel etc. my main aim is to have tidy finances to i can forecast the future better. oh and by the way i never have much money in my natwest current account so i'm not worried about the interest rate here. any spare money i try and overpay the mortgage..

if i went to extremes i could perhaps borrow 20 grand off CC's and over pay my mortgage but with the new transfer fees, is it really worth it? again, seems to complicate things. i like simple

nearlyrich

You can set up a DD to pay the full balance as you rightly say, not sure why waiting for cashback is a hassle, it's money for nothing. If you want to book a hotel or hire a car you might struggle without a CC.

CannyJock

Credit card and debit card both keep a track of your spending so lets you look back and see just how much you've spent on fuel/shopping etc each month.

0% purchase card lets you pay for things as normal, pay the minimum during the 0% period, save the money you would normally have spent in a high interest instant access savings account (Kaupthing Edge 6.5%, or even in an ISA), then repay it at the end of the period.

Would also give you an easy date with a single minimum repayment to include in your forecast.

EDIT: If you're looking for extra money to help pay the mortgage, if it's an offset mortgage you could always go for a 0% BT deal and stooze it. It's temporary for sure, but others (MartinsLoveChild being a notable case) have done this to clear their mortgage years early.

missile

Credit Cards are not for everyone and for some the temptation to spend more than they can afford is irresistable. Another disadvantage is credit card fraud / cloning.
You have listed some advantages of having a CC for savvy MSE people. Another advantage is you can save the money you would have spent on the CC, thus gaining interest on the rolling balance.
If your main use is shopping and fuel you might want to consider Asda CC which gives a discount on fuel.

want2bmortgage3

i could be interested in stoozing to over pay my mortgage, but is it as easy these days? i've got a few CC's i was considering closing. a virgin one with about 8k limit, capital one 7k, alliance leicester 2.5k. so this all adds up, they are all currently 0%, but only for a few months. when it comes to balance transfers surely the 2.99% (or thereabouts) balance transfer eats up any interest you might save?

missile

If we had more info we could do the sums, but if you have say less than 6 months left on 0% balance transfer then you would probably pay out more than you would save. If you pay balance transfer fees now for savings in the coming months, would be a further disadvantage.

Stoozing works well for some but it needs discipline and maybe not for those who want to streamline their finances?

skyrider007

CC is useful for making large purchases (so long as you could afford them!) as purchase/fraud protection is often much better than debit card.

The 56-60 days interest-free period is also useful. Depending on your card issuer, the card may come with loads of benefits such as rewards, cashback, travel insurance, entertainment and dining privileges etc. (see AMEX charge cards).

Tr@cker

Used properly they're the best thing since Rebecca Loos but of course there's always a significant number of people who use them wrongly-thats how the card companies make their money.

CannyJock

want2bmortgage3 wrote: »

i could be interested in stoozing to over pay my mortgage, but is it as easy these days? i've got a few CC's i was considering closing. a virgin one with about 8k limit, capital one 7k, alliance leicester 2.5k. so this all adds up, they are all currently 0%, but only for a few months. when it comes to balance transfers surely the 2.99% (or thereabouts) balance transfer eats up any interest you might save?

Stoozing to offset your mortgage can work out pretty lucrative.

Look at the stoozing calculator and use the APR on your mortgage as the "interest rate" and "no tax". Remember you can usually only transfer 95% of your credit limit. It'll do the calcs for you tgo show you how much interest you can "save" rather than actual interest earned: http://www.stoozing.com/calc.htm

Before closing the cards, read this article that Clariman wrote on how to negotiate an extension to a deal: http://www.makesenseofmoney.co.uk/a_extend.html

A bit of negotiation and you could get some useful deals to reduce the interest you're being charged on your mortgage.

jonesMUFCforever

The best thing about credit cards has to be the protection it gives you under section 75 of the Consumer credit act.
Any purchase (or part purchase) of goods and services over £100 but under £25k is covered.

Fluffi

Purchase protection and less stress if your credit card is cloned compared to your debit card.

Most cards offer purchase protection on goods or services purchased over £100, which is good if you order something and the company goes into administration (like Courts a few years ago) or you are unhappy with the service (like British Gas when they mucked up a friends boiler installation - once BG knew the CC company had been informed they were round pretty quick sorting it out).

As for fraud prevention, I've seen a couple of scary stories where debit card fraud has left people struggling for cash while the bank tries to sort things out for example http://news.bbc.co.uk/1/hi/uk/4418350.stm so I always use my credit card. I've had one of my credit cards used fraudulently in the past and it was sorted out fairly painlessly and I didn't have to worry about whether I would have enough cash in my account pay my mortgage or direct debits, whereas if it had been my current account I would have been extremely stressed!

The only place I use my debit card at ATMs to withdraw cash and I still worry about cloning at ATMs though. When I see my friends using their debit cards for everything I worry because the way I see it the more people who handle your card or know the card number to the more likely it is its going to be cloned!

Credit cards are great if used sensibly . I know how much I can afford to spend on it a month and so I normally buy my petrol, train tickets and most of my food at the start of the credit card month. Then its easy to see how much more money I'm allowed to spend that month and I always pay my card it full at the end.