6 ms·

OK, I guess I'm a completely different use case. Why multiple credit cards for purchases? Why don't you buy things using a debit card?

mikeash 15y ago
Credit cards provide several advantages over debit cards. In the case of fraud or simple mistakes, money isn't directly removed from your account. You also effectively get a ~30 day revolving interest-free loan if you pay the card in full every month. You can make unusually large purchases without waiting for money to transfer around, since the card can be paid off later. As for multiple cards, some of it is playing games with different rewards programs (card X gives more points for groceries, but card Y is better for gas, etc.) and some of it is that not every place takes American Express, which is generally my preferred card.
esrauch 15y ago
In addition to what mikeash said, using a credit card and paying it in full improves your credit score whereas a debit card doesn't, which will make it easier to get loans later.
- salvadors 15y ago
  That's (thankfully) not true in the UK (or, indeed, most countries).
  - esrauch 15y ago
    Is there no such thing as a credit score in the UK? Or does paying credit cards not improve your credit score? The banking industry in the US is messed up, but how does it not make sense that responsibly paying loans doesn't indicate you are more likely to make good on future loans?
    - salvadors 15y ago
      There's no such thing as a credit score (at least not in the US sense). The big problem with the US system is that it gets you needlessly hooked on the whole idea of credit. As per this very example, you need to do things like get credit cards just to pay them off on time, or else you're screwed when it comes to things like getting a mortgage. In most of Europe the key factor for that sort of loan is simply whether you have a steady income that's high enough to make the payments, factoring in outstanding debts. A credit check will show up things like whether you've a history of missing payments on any existing credit, and that can certainly be taken into account, and most lenders have their own version of a 'credit score' they'll apply based on all that info — but it's not a centralised thing, and it's generally more concerned with raising past problems as a red flag, rather than with past good behaviour. If you've a history of living within your means that should be a good thing, not a bad thing.
      - kr1shna 15y ago
        Are you saying the UK doesn't have a credit score system or that it's not used in the same way as it is in the US? Because I'm constantly getting emails from Experian asking me to do a free credit check, etc. etc.
        salvadors 15y ago
        There is no central credit score — each lender (or credit agency) creates its own sets of rules as to whether you're good or bad, all with different criteria. Some of those may package it up as a "score", but that's essentially meaningless. Checking that your credit reports from the major agencies (Experian and Equifax are used by about 90% of lenders IIRC) are accurate is worth doing from time to time, especially if they're offering it for free (although as the maximum they're allowed to charge, by law, is £2, be careful that the "free" version isn't a way of sucking you in to something else) http://www.moneysavingexpert.com/loans/credit-rating-credit-score http://www.moneysavingexpert.com/loans/credit-rating-credit-... sets it out quite well.
      - esrauch 15y ago
        > If you've a history of living within your means that should be a good thing, not a bad thing. How is always paying off a credit card not living within your means though? Maybe this is some US-centric brainwashing, but it seems to me that someone who has never had a credit card is less trustworthy than someone who had it and didn't overspend; it proves that the person had the opportunity to do something really dumb and didn't. The person who never had the credit card might have done something dumb if they were ever given the chance. It's interesting that your credit checks are so decentralized, but it seems unlikely to me that would cause them to consider no history to be the same as known good history. That said, I'm not even sure how much impact properly paying credit cards has versus not having one, but even with a minor difference there is practically no advantages to using a debit card instead of a credit card that you always pay off in full from your checking account. Even excluding credit, certainly you must get additional fraud guarantees and possibly rewards programs with credit cards in the UK?

mikeash 15y ago

Credit cards provide several advantages over debit cards. In the case of fraud or simple mistakes, money isn't directly removed from your account. You also effectively get a ~30 day revolving interest-free loan if you pay the card in full every month. You can make unusually large purchases without waiting for money to transfer around, since the card can be paid off later. As for multiple cards, some of it is playing games with different rewards programs (card X gives more points for groceries, but card Y is better for gas, etc.) and some of it is that not every place takes American Express, which is generally my preferred card.

esrauch 15y ago

In addition to what mikeash said, using a credit card and paying it in full improves your credit score whereas a debit card doesn't, which will make it easier to get loans later.

salvadors 15y ago
That's (thankfully) not true in the UK (or, indeed, most countries).
- esrauch 15y ago
  Is there no such thing as a credit score in the UK? Or does paying credit cards not improve your credit score? The banking industry in the US is messed up, but how does it not make sense that responsibly paying loans doesn't indicate you are more likely to make good on future loans?
  - salvadors 15y ago
    There's no such thing as a credit score (at least not in the US sense). The big problem with the US system is that it gets you needlessly hooked on the whole idea of credit. As per this very example, you need to do things like get credit cards just to pay them off on time, or else you're screwed when it comes to things like getting a mortgage. In most of Europe the key factor for that sort of loan is simply whether you have a steady income that's high enough to make the payments, factoring in outstanding debts. A credit check will show up things like whether you've a history of missing payments on any existing credit, and that can certainly be taken into account, and most lenders have their own version of a 'credit score' they'll apply based on all that info — but it's not a centralised thing, and it's generally more concerned with raising past problems as a red flag, rather than with past good behaviour. If you've a history of living within your means that should be a good thing, not a bad thing.
    - kr1shna 15y ago
      Are you saying the UK doesn't have a credit score system or that it's not used in the same way as it is in the US? Because I'm constantly getting emails from Experian asking me to do a free credit check, etc. etc.
      - salvadors 15y ago
        There is no central credit score — each lender (or credit agency) creates its own sets of rules as to whether you're good or bad, all with different criteria. Some of those may package it up as a "score", but that's essentially meaningless. Checking that your credit reports from the major agencies (Experian and Equifax are used by about 90% of lenders IIRC) are accurate is worth doing from time to time, especially if they're offering it for free (although as the maximum they're allowed to charge, by law, is £2, be careful that the "free" version isn't a way of sucking you in to something else) http://www.moneysavingexpert.com/loans/credit-rating-credit-score http://www.moneysavingexpert.com/loans/credit-rating-credit-... sets it out quite well.
    - esrauch 15y ago
      > If you've a history of living within your means that should be a good thing, not a bad thing. How is always paying off a credit card not living within your means though? Maybe this is some US-centric brainwashing, but it seems to me that someone who has never had a credit card is less trustworthy than someone who had it and didn't overspend; it proves that the person had the opportunity to do something really dumb and didn't. The person who never had the credit card might have done something dumb if they were ever given the chance. It's interesting that your credit checks are so decentralized, but it seems unlikely to me that would cause them to consider no history to be the same as known good history. That said, I'm not even sure how much impact properly paying credit cards has versus not having one, but even with a minor difference there is practically no advantages to using a debit card instead of a credit card that you always pay off in full from your checking account. Even excluding credit, certainly you must get additional fraud guarantees and possibly rewards programs with credit cards in the UK?