Are any credit cards worth getting for the rewards?

[Saracen]

Same here, some careful 0% management this year means that I don't need to get an 8% loan to dig me out of a hole.

That's perfectly true, and sound financial smartness ... provided the caveats I mentioned about about not getting seduced by the availability of credit are followed. 0% cards are getting harder to find though, especially where a (free) balance transfer is involved.

The danger, and I've seen people do it, is that if you finance a "hole" like that, you've got to be taking active steps to sort the reason for the hole in the first place, because it's only a reprieve. And by "you", I mean a generic person in a hole, not you specifically, Tig. Far too many people seem to have a tendency to procrastinate .... not do today what can be put off 'til tomorrow, or next month. And it's easy to put a bill (say, the electricity bill) on the card, because it means you can worry about it later rather than right now when times are tough. And fair enough, providing provision is being made for when the 0% period runs out, be it changing jobs, finishing Uni and getting a job, recovering from illness, selling a car for a cheaper one or whatever.

The danger is that all the "putting off" sometimes means that hard decisions, like changing lifestyles, can be deferred and by the time they can't be deferred any more, the problem is much bigger.

But yeah, that's a good way to use them. If you do it smartly, as I'm sure you do Tig, it's a great tool and a sensible strategy. But, depending on personality, it's also a bit dangerous because it can be a trap if it's just used to bury the problem, because it can't be buried indefinitely.

[finlay666]

But yeah, that's a good way to use them. If you do it smartly, as I'm sure you do Tig, it's a great tool and a sensible strategy. But, depending on personality, it's also a bit dangerous because it can be a trap if it's just used to bury the problem, because it can't be buried indefinitely.

I think the main problem is lack of true control over your finances.

If you don't know your true incoming amount and outgoings you can't afford the risk. Same with people that go from offer to offer. It might be savvy but one mistake and you have say £15k to repay which you might not be able to pay off.

[TooNice]

I like credit cards with cashback. As long as you treat it like debit cards (pay in full each months), it's extra discount on spending. The cashback is small enough that it won't make me justify buying something I otherwise wouldn't, but a discount is a discount

[jim]

I disagree, only for ones that have promotional interest free periods though, I pay off more than the minimum on mine but with an interest free period until March or so next year I have put the money to one side to get interest/investment from it

True, but you never get a combination of rewards + interest free (or at least very rarely) and this thread is more about the rewards.

Certainly never get the two confused, or you'd be in an extremely deep hole in comparison to the one you started off in!

[finlay666]

True, but you never get a combination of rewards + interest free (or at least very rarely) and this thread is more about the rewards.

Certainly never get the two confused, or you'd be in an extremely deep hole in comparison to the one you started off in!

Well a promotional interest free period IS a reward, it's what they use to draw you to their service.

Never rewards + interest free?

http://www.moneysavingexpert.com/car...dit-cards#zero

The Top Card. 12 months 0% on purchases

Tesco logo The longest deal available is with Tesco's Clubcard Credit Card, which gives a big 12 months interest free on new borrowing, followed by 16.9% APR.

Spending with this also earns you 1 Tesco Clubcard point per £4 you spend

Next Best Cards. 10 months 0% on purchases

Sainsburys logo If you've already got a Tesco credit card, you'll need to apply for one from a different provider. The next best deals both give 10 months 0% on new borrowing, followed by 15.9% APR.

Sainsbury's offers 10 months interest free on spending (12 months on Sainsburys goods), plus you get Nectar points when you use the card, although only 1 point for every £5 spent outside of Sainbury's

M&S have the same offer as Sainsburys

The Best of the Rest. 9 months 0% on purchases

Play logo Behind this, Play.com's credit card gives 9 months 0% (then 15.9% APR), plus loyalty points, including 1500 Playpoints (worth £15) when you spend £150 in the first 90 days; read full details of this in Credit Card Freebies.

You can also get 9 months 0% from both Halifax* and Bank of Scotland* then 15.9% APR. Over 50s can get the Saga card which gives nine months 0%, followed by 11.9% APR.

Took me less than 2 minutes to find ones that had decent interest free period + rewards

Granted Amex offer the best/better rewards generally, but you have to pay them off in full every month.

[jim]

Well a promotional interest free period IS a reward, it's what they use to draw you to their service

Perhaps, but classifying all of them as "rewards" just confuses the issue even more. Fair enough on those rewards cards, the main point I'm trying to put across is that in general cashback cards and 0% cards serve completely different purposes.

[tiggerai]

That's perfectly true, and sound financial smartness ... provided the caveats I mentioned about about not getting seduced by the availability of credit are followed. 0% cards are getting harder to find though, especially where a (free) balance transfer is involved.

The danger, and I've seen people do it, is that if you finance a "hole" like that, you've got to be taking active steps to sort the reason for the hole in the first place, because it's only a reprieve. And by "you", I mean a generic person in a hole, not you specifically, Tig. Far too many people seem to have a tendency to procrastinate .... not do today what can be put off 'til tomorrow, or next month. And it's easy to put a bill (say, the electricity bill) on the card, because it means you can worry about it later rather than right now when times are tough. And fair enough, providing provision is being made for when the 0% period runs out, be it changing jobs, finishing Uni and getting a job, recovering from illness, selling a car for a cheaper one or whatever.

The danger is that all the "putting off" sometimes means that hard decisions, like changing lifestyles, can be deferred and by the time they can't be deferred any more, the problem is much bigger.

But yeah, that's a good way to use them. If you do it smartly, as I'm sure you do Tig, it's a great tool and a sensible strategy. But, depending on personality, it's also a bit dangerous because it can be a trap if it's just used to bury the problem, because it can't be buried indefinitely.

My "hole" was due to the recession and not getting the "Market rate" for my profession in the city for 2 years and also buying a house 3 years ago. I couldn't help but put it off until now as I was only breaking even on my DD's with my salary minus the commuting costs.
I didn't have a choice but to live on a credit card for the past year - paying off as much as possible and having 2 full time jobs... It's taken a lot of calculating but I should make a 8k hole into a 1k hole by this time next year

However, my "hole" is going to become a shallow ditch by this time in 12 months due to some shrewd financial planning... and a job move closer to home for the right money. (cheapo holidays only...)

Paying for a flat by myself in a recession has bitten hard, but I managed to get a better job that can turn things around.

No bills go onto my CC's - they're all paid by DD. The only things that do are the food shop, petrol and any other purchases - which nicely rack up tesco points for me to turn into a nice trip away in a couple of years.

Hiding from debt (like some people do...) is not the way to solve things. Active financial management (spreadsheets + online banking ftw) and doing something about it (job move, 2nd job etc) are the only ways to dig yourself out of a hole that may not have been able to be avoided.

Sound advice Saracen. It's good to know I'm on that right tracks already!

[Saracen]

It's good to see you climbing out of the hole, Tiggs, and I hope you didn't see my comments as a criticism of you being in a hole. I'm certainly fully aware that holes can rapidly or even instantly appear in front of what seems to be a course navigated on firm ground, and for no fault of the navigator.

That's kinda my point. Event's like recessions have a habit of being hard to predict with any certainty, let alone just losing a job or, as I mentioned, illness or accident. But it's exactly things like buying a house that can push people's finances so close to the limit that it doesn't take much to trip them over the edge. For instance, this recession has seen interest rates collapse, but a different type of economic disaster, like the last big one, saw interest rates going the other way, peaking at about 15% (base rate). I saw my mortgage payments jump up by about 70% due to that. Fortunately, I'd been pretty cautious in what I bought and hadn't pushed myself too far, and even so, that interest rate hike took me pretty close to the edge for a couple of years. And it took a LOT of people right over the edge. One guy I know, in desperation, posted the keys to his new flat thought his solicitor's door with a note saying "give these to the building society" and vanished. I'm led to believe he fled the country and as far as I know, 20-ish years later, has never come back to face the large debt negative equity left him with. And that was when income to house-price rations were more reasonable than they are these days.

Personally, I don't like credit cards. I won't use them unless I have to, and even then, ONLY if whatever I'm buying has the money sitting waiting to pay it off immediately,and only for Consumer Credit Act protection. Otherwise, if I can't affords it I don't buy it. But I'm not talking about the type of situation you outlined, but where its simply about using it to buy things. I will not, for instance, buy something like a TV on the basis that it's an interest-free deal unless I can afford to buy it for cash. If I can, then buying on the card, taking advantage of interest-free new debt and leaving the cash sitting in a savings account earning me interest is a way of increasing income a little and taking advantage of the interest-free deal ... though these days, the interest you gain that way hardly makes it worth doing IMHO. What I won't, personally, even consider is buying that same TV on interest-free credit because, by the time it runs out, I will have the money to pay it off. I'll only do it if I already have the money, because if you rely on what you expect to happen and it doesn't, because of illness, recession, accident etc, then that is when it's easy to end up caught in the credit card trap.

But there's a world of difference between exposing yourself to that risk for a new TV< car or whatever, and exposing yourself to a notional and unintended risk for the sake of getting yourself on the property ladder. Getting on that ladder, for so many people, is a case of sound financial planning, and over most of the last decade or so, the later you left it to jump on the ladder, the harder it got and the less you could get for what you could afford, even assuming you could afford to do it at all, which so many people couldn't. Assuming you jump on, at least you get out of a rent trap, and are somewhat insulated against future house prices .... which, I note, seem to be slowly climbing again over the last few months.

I guess what I'm saying is that taking that risk over buying a house is a sound risk, even if it goes wrong, and that it looks like you got caught by unpredictable bad timing, beyond your control. it also seems like you are taking all possible remedial action, and are almost out of the hole. Abut what if you'd lost the job and not been able to get another one? What if interest rates had shot up, like last time? How would you be if your mortgage payments had gone up by about 70%, like mine did? For instance, a £1000 monthly payment became a £1700 monthly payment?

That's the trap people riskwhen using interest-free cards to defer the situation. If you can dig yourself out of the whole before the interest-free deal runs out, great. But for those that use it to defer decisions that are likely to end up as ultimately inevitable can find that credit cards can make the hole deeper, not provide a way to get out of it.

There's no absolute black and white. You've got a situation where you've intelligently used an option to resolve a problem, and I don't wish to seem to be implying any criticism at all. Credit cards can be very useful, either in that type of situation, or for facilitating international travel, hotel reservations, car hire, and so on. But they can also be a trap, and a very hard to see trap at that, that ends up making a bad situation far worse, unless people use them intelligently and with a considerable degree of caution.

Using them in anything other than the ultra-cautious manner I do (and advocate above) is a risk. It's a risk most people get away with, but the unexpected can have disastrous implications, so all I advise is to use them where needed, when the reasons for using them justifies the risk, but otherwise, exercise restraint and don't buy stuff if you don't have the money up-front. Buying stuff on the basis that you expect the money to come in might be a small risk and most people get away with it most of the time, but if it goes wrong, the impact can be horrendous and, IMHO of course, is a risk best avoided, especially if the point of the risk is minimal gains of a percent or so cashback, or Tesco reward points.

Of course, personally, I would touch a supermarket credit card (or bank account, insurance, etc) with a bargepole because I don't trust them with that degree of data about my spending patterns, which is also why I wont use even a reward card. It's also why I pay for most day-to-day expenditure in cash, and won't use a card of any type, even a debit card, if it leaves a footprint in their data warehouses. But then I know I'm rather atypical about that, and that most people either don't know about such things or just don't care, as long as they get a few quid back as a result. So it also depends, in terms of rewards for using credit cards, how highly you value any rewards you might get, and maybe that impacts our personal assessments of what risks are worth taking. My personal preference is to use cards when and only when the risk is worth taking ..... having seen what can happen if the unexpected does bite.

[tiggerai]

No criticism taken (and I'm on a fixed rate mortgage until 2011 - for the exact reason that I knew what I had to pay while I'm working on my career / unexpected happened)


There ARE people who don't know what they're doing with their money who NEED to have a tongue lashing about buying things they can't afford. (ok, I am guilty of the odd impulse purchase... but the most recent one will save me money in the long run)

If I'd lost the job, then I have insurance for that... and is exactly the reason I'm filling in the hole. Living for 18 months with No savings and No way of getting any has made me into a worried paranoid mess.

As I said - it was an 8% loan for 2 years or some careful 0% management... Pros and Cons to each one... and no clear winner... Apart from me being debt free in 18months *yay*

[aidanjt]

There's only one rule about credit cards worth considering... If you don't have it sitting in your current account, don't spend it (even with 0% int. cards). The only thing you should ever buy on tick is either a car, or a house, and if you can afford it with plenty of room to save.

[Saracen]

Understood, Tiggs ... and you've obviously thought it through .... and still got caught to some extent by the recession. That's why despite my occasional patronising-sounding lectures, I have a HUGE amount of sympathy for those that get caught out, not least because I so nearly got caught out myself. It worked out, as it is with you, but it so easily could have gone the other way.

A bit of "worried paranoia" now is highly constructive, in that it makes it far less likely you'll come even close to get caught in the future. That's why, despite how useful credit cards can be, I refuse to put anything on them that's not necessary, and justified, and I'm very conservative about what's justified .... because I came too close to getting badly burned last time.

There's an old adage that seems to me to fit about how I feel about credit cards ...... fool me once, shame on you, fool me twice, shame on me. I learned about unexpected and unpredictable events the hard way, and if an occasional rant on here means someone else might benefit even a little from me nearly getting my fingers burned by interest rates and an economic slump, then it's worth it. Unfortunately, my cynicism also tells me that most people don't learn much from being told, but only from experiencing it themselves. I remember being told, as a child, don't touch that, it's hot. But naturally, being pig-headed, I had to find out for myself why it really wasn't a good idea.

I paid more attention to being told "hot" after that. But I'm not sure I improved much on the general point with age, and I haven't seen much to suggest other people are brighter either.

[Saracen]

There's only one rule about credit cards worth considering... If you don't have it sitting in your current account, don't spend it (even with 0% int. cards). The only thing you should ever buy on tick is either a car, or a house, and if you can afford it with plenty of room to save.

I would agree entirely, except I'd exclude car from that list too.

If you can't afford a nice car, buy a cheaper one. If you can't afford a cheaper car outright, you almost certainly can't afford to run it anyway.

[aidanjt]

I would agree entirely, except I'd exclude car from that list too.

If you can't afford a nice car, buy a cheaper one. If you can't afford a cheaper car outright, you almost certainly can't afford to run it anyway.

I wouldn't completely disagree with that either. But at least a decent car will retain some reasonable value when you sell it on. And the implication of 'with plenty of room to save' would preclude vehicles which are too expensive for the owner to maintain.

[Saracen]

I wouldn't completely disagree with that either. But at least a decent car will retain some reasonable value when you sell it on. And the implication of 'with plenty of room to save' would preclude vehicles which are too expensive for the owner to maintain.

Oh I accept the caveat, in full.

The point I was making, I guess, is that a reliable economic car doesn't have to be expensive. For instance, about three years ago I bought an old Polo, for just under £1000, because I didn't want to use my other car for the mileage a particular job entailed. It's cost next to nothing to run, beyond insurance, and has been as reliable as the Sun rising in the morning. It's a right corker of a little motor. You don't have to spend a lot to get reliable transport. On the other hand, a few years ago I bought a BMW M3, new, and paid cash ..... not least because they dealer wouldn't take American Express. Or rather I paid by cheque ... with the deposit on Amex. I still have that M3, and that's what I wasn't going to use for zipping all over the country on that project.

If the object of the exercise is cheap, reliable motoring, it can be done on a fairly low budget, and if the budget is low enough to not be able to pick up something like that Polo, then I question the practicality of running car at all.

So .... if someone has to take out a loan to afford a car, it isn't about getting a mode of transport from A to B, it's usually about getting something they want, rather than need. Maybe they want a newer one, but older doesn't necessarily mean less reliable. Maybe they want something more flashy, or faster, which is fine if you have the money to pay for it.

It's a judgement call and we each make our own decisions, and live with the consequences but my judgement is that rarely is a car loan needed, except at the very low end for people that need one and can't afford to buy outright (which raises the running costs issue), even for the likes of that Polo. Would I borrow money to buy flasher or faster car? Nope. But some other people clearly would, and do. I'm not saying it's wrong to do so, as it's our own call for each of us, merely that it's a risk I won't take.

Oh, and while I do have sympathy for people caught out by the unexpected over house purchases (unless it's an extravagant upgrade), I have markedly less so for those dropped in the poop buying a flashy motor. It comes back to what we both seem to believe .... with a few exceptions, if you can't afford it, don't buy it.

[aidanjt]

...

Agreed, 100%. Buying flashy motors well beyond your means is idiotic. I guess it depends on the situation, whether buying a car on tick is warranted, or not.

[Whiternoise]

Wow, this exploded in a couple of hours

I'll clear up a couple of things about my situation:

1) Yes, student, although i don't have a large student loan (don't need or want one and i only used it for my laptop last year which i'll pay off at the end of my degree with my savings)

2) I don't care about interest free stuff, i'm not likely to be buying a car or a house and i don't tend to buy things on impulse (not even having a credit card has made me buy things that i can't afford just yet)

What i was interested in was the ones that give you cashback or just points towards things (like airmiles). The intention was to set up a full direct debit and then use the card for everything i can so i get the benefits of increased protection and the credit rating boost.

As for data monitoring, i'm not really bothered about it because there's not that much i think they could glean from it that wouldn't be surprising. Unless i was continually visiting strip clubs and buying porn over the internet with it, i don't think it would be an issue. So they can see that i buy meat and veg once every couple of weeks and that i like good quality drink? Meh. It's a far cry from internet monitoring!

Let me rephrase, i don't want one that gives me a one off reward - a £15 voucher isn't worth it imo and i could get that from doing a few surveys. I was looking at something like air miles that i might actually use, but there are quite a lot of different ones (specific airlines and the original Air Miles). Or of course there are things like nectar which are virtually useless unless you actually have a credit card with them.

And then i thought, hey, i'm paying £3k a year to Warwick University, that's a lot of air miles!