Brendan Hughes

Should I have a credit card?

I've got one as the bank pretty much forced one on me when I got the mortgage, and as I pay 100 quid a year for some fancy Premium account, the fees are absorbed in that. But I hate the idea of credit, I don't like to buy things unless I have all the money, and as I've never had one before (am now 35) I'd be scared that I don't pay it at the end of the month and thus get hit for interest.

Wife signed up for a new account yesterday and they tried to push one on her too, but we resisted.

I've always had a debit card with raised lettering and the VISA sign (not the flat Electron ones), so I can use it exactly like a credit card, in cash machines, swiping, car hire, down the phone etc.

HOWEVER

I hear they have advantages; insurance for things bought, protected payments, ability to claim for misuse, etc that the debit card might not have.

This post isn't about transferring 0% interest debts between credit cards, as I don't have such debts. But am I missing out on certain forms of protection that I don't know about? For instance, my debit card has five grand in the acccount, is all that money at risk whereas a credit card comes with some sort of insurance?

And how about buying off the internet (which I've not done before as I'm a Luddite)? Which card is safer to use?

Thanks for your advice

Brendan

IWatkins

I have a credit card so that I can buy online with some peace of mind. I pay the balance off from my current account (via online banking) as soon as it comes in so I never pay any interest.

The only reason I have the credit card is for this use. Also handy to have though, in case of emergencies.

Cheers

Ian

Brendan Hughes

Thanks Ian. Why peace of mind compared to an alternative?

Old_Fart

I have a small limit credit card for the same reason, peace of mind. If someone were to get all the details they would still only be able to max out the card £1k or so. My debit card maxes out at an outrageous limit 'cause I is so wealfy innit?
You *should* be able set up a direct debit to clear the balance each month so you don't even have to worry about mising a payment/accruing interest.
Rgds
Chuck

class_A

If your debit card number is compromised through a transaction with a dodgy website and all your current account balance disappears, you're screwed.

A credit card offers much more protection, most card companies offer a "no fraud guarantee" and tend to hound companies extremely heavily on your behalf if a transaction goes wrong.

Also, people in other countries won't have heard of Switch or Visa Delta!

ozzy

Credit Cards can be used to your own advantage, but should be treated carefully. It's all too easy to get a large limit and just spend, spend, spend.

I usually make sure I have enough in my Bank accounts first to pay cash, but I'd pay by CC then pay off the balance within a week or two. It's especially good for Electrical goods or holidays since you often get free Insurance cover with purchases or even something as simple as Air Miles.

I would say go for it. Shop around to get the best deal and use it wisely.

Stefan

IWatkins

Peace of mind ? As above really.

Protection to the consumer is built into credit cards. For example, most items bought on a credit card have something like 6 months insurance (I'm not 100% on this). In addition (and most important to me) is that if you buy something mail order on credit card and it doesn't turn up etc. but you are charged for it it is very easy to get the money back. I.e. the credit card company is on your side and will get the money for you.

As also mentioned, you current account balance isn't at risk if someone gets your credit card details. Add to that that most credit cards have anti-fraud protection to protect you if it does happen.

On downside is that it can be tempting at times to buy stuff beyond your means to pay it back without incuring interest, but that is just a self control thing. Sounds like you are like me, hate to be in debt to anyone, so I think you'll be alright.

Cheers

Ian

Dracoro

Pay it back in full every month and it's, in effect, free credit. You spend £200 and pay it back on your debit card and that's £200 that's NOT earning any interest.

To me, the amount you gain is too small to really care, but if you've got big earnings and expenditure then there's cash to be saved.

Personally I use my credit card for 'erroneous/extra items'. i.e. for non bill/food etc. purchases. That way, I know how much I'm spending on gifts, CD's, clothes etc. that I may not normally spend. I always pay it back and it's a useful indicator of where I can save money if I need to cut back.

[Edited by Dracoro - 12/17/2003 12:25:44 PM]

AdrianFRST

There are also advantages with things like rewards. I get Nectar points for using my Sainsbury's Visa, no matter where it is. If I spend at Sainsbuy's itself, I get double the points, which means they accrue at quite a rate when I fill up twice a week at a JS filling station.

For really large purchases that you aren't going to pay off, or would normally pay by another means, then you can obviously pay on the card, get the points then pay it off with cash, or transfer it.

civictyper

Most card issuers will insure purchases over £50 or so which is pretty handy. Purchasing on-line is also guarantees against fraud although not so handy for you if you don't shop on-line.

If you have an offset mortgage though and can control a card then it's worth using one for all of your monthly spending. If you get paid on the 1st then its beneficial to keep the full balance in the account until the end of the month (before transferring it to your card) as you will have a much higher average balance on the account. If you use a card with cashback/nectar/clubcard points too then you can benefit further still.

Incidentally it's worth doing the same with the bills by shifting the payment date to the end of the month too.