Credit Cards vs Debit Cards

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Soldato
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OK, as a complete finance numpty I am putting this SOS out there for help :)

What are the *actual benefits* of having a credit card as opposed to debit cards? Im 23 and i've never had a credit card, nor overdraft, so i'm struggling to understand why i'd ever need one.

Surely if someone needs money, but doesnt have it until the end of the week, then why not get an overdraft on your debit cards (barring interest obv)?

Aside from liability on large purchases and building up a credit history, are there any real tangible (sp) benefits to moving to a Credit card from a debit card?

BR,
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Credit card protection - your contract is with card co not directly with retailer iirc

Earn some interest on whats in your current account (or pay less interest)

More ability to spend money you don't yet have ;)

Can make larger purchases on a credit card than debit cards will allow
 
Credit cards typically have three customer types, those that have money and those that don't.

Those that have money typically have large overdrafts and balance transfer the money out in to a high interest rate account for a year and minimal cost to them. If you have a good number of 0% cards with considerable overdrafts, this can be a means of generating a modest income for doing very little.

The second person requires money and therefore leans on the credit card to gain extra credit, typically for support and emergencies. They generally pay the modest balance off at the end of the month. So you have to ask yourself, it they can afford to do so, why not just scrap the card and save for a month instead? The CC can offer purchase protection, but so too can certain bank accounts.

And finally there's the abuser, the impulse buyer and those living beyond their means, the worst person to have a credit card, the worst offender for jumping cards and only paying the minimum balance but the banks love 'em.

The final point these all share is the flexibility for international purchases and spending which you can't do on a debit.
 
If you don't have self-control then don't buy a credit card.

Often people will keep them in a drawer until they're buying something online or booking a holiday.

Some people use them when buying anything abroad - cash is probably a better bet as you get screwed on the exchange rate compared to cash. Unavoidable sometimes though.

Useful thing to have - I always have two, one is M&S so get points when I spend there.
 
I put big purchases on my CC, usually holidays or car insurance. Why? Well I do it for the credit rating and it also stops me from taking massive chunks of cash out of my current account and potentially screwing me up for the rest of the month, allowing me to pay it off in however many chunks I require.
 
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Bleek said:
Credit cards typically have three customer types, those that have money and those that don't.
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Pretty sure I don't fall into any of those categories.

I put pretty much everything I buy on my CC every month. I pay it off in full every month. My current account only really has direct debits going out, one of which is the DD to pay my CC bill. No balance transfers, no overdrafts, no living beyond my means.

Savings are dealt with separately.
 
div0 said:
Pretty sure I don't fall into any of those categories.

I put pretty much everything I buy on my CC every month. I pay it off in full every month. My current account only really has direct debits going out, one of which is the DD to pay my CC bill. No balance transfers, no overdrafts, no living beyond my means.

Savings are dealt with separately.
Click to expand...
Im the same - I dont need to borrow but use CC for the additional protection - always paid off each month without fail...

ps3ud0 :cool:
 
Well I was in a similar position to you. I don't really have a need for a credit card at all but i decided to get one for the following reasons:

  • Earn the interest on money in my current account current account that i have spent on my credit card
  • Get on my way to having a decent credit rating which be handy in the future
  • Protection when buying stuff online

I only really use it for buying fuel and the odd online purchase. I pay it off each month so it isn't costing me anything and I get to make a bit extra interest on my current account as a result. Good times.
 
The main advatanges (as you've mentioned) are to improve credit rating and for better purchase protection. Other advantages include:
- better ability to use abroad than debit card (can depend on the card though)
- ability to spend money you don't have (can be positive or negative)
- cash back (again depends on the card)


I'm of the opposite opinion, why not use a credit card? Better fraud protection, improved credit rating...if you don't spend what you don't have and always pay it off then I think it's a good thing to use :)
 
PMKeates said:
Credit cards are great. However, I just applied for an Amex cashback card and got refused?!

Warpath!
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I think the cashback cards are quite strict with regards to past credit histroy, earnings and length of time at current residence.
 
Not wanting to de-rail this but what cards would people suggest? I'm in a similar situation to the OP an would like to get a card for the reasons mentioned above. Not looking to spend loads on it, but have no idea where to start!
 
Benihana said:
Not wanting to de-rail this but what cards would people suggest? I'm in a similar situation to the OP an would like to get a card for the reasons mentioned above. Not looking to spend loads on it, but have no idea where to start!
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I went and got a Barclaycard with the only reason being that my current account is with Barclays. If your going to clear it every month just get the one that offers the most benefits to you. Some off money off vouchers or cash back etc...Oh and be prapared to spend at least 1 hour in the bank while they fill out your information :/
 
Check out moneysavingexpert - usually has a list of recommended credit cards - it dependent on your requirements and spending power...

ps3ud0 :cool:
 
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