Is there any point in getting a credit card?

sweet_trip

Just wondering. I'm approaching my 30's now, and never really had any major expensive.
I can afford my health insurance, car insurance, and everything else.
I have over 30k in my bank and more in various CU's.

I've been using my TSB current account since leaving secondary school.

I just never ever felt the need to get a credit card.
Infact I don't even know if that requires a different bank account or splitting my money or what?

I went for mortgage approval last year and they never really mentioned it. I got approval but never took it further.
Does not having a credit card mean I have no credit rating?

It seems to me like credit cards are for people who can't afford to pay off things that cost a couple thousand in one go.
Is there really any need to get one if I'll probably never use it?

Get Real

No, there's really no need to get one. They were big pre-2008.

You don't need one to establish a credit score, that's in the States really. But in Ireland you might not even have a credit rating at all and it doesn't matter. The bank just want to see a good, regular savings stream and a decent income.

http://www.icb.ie/credit_rating.php

Many people go for mortgages and have never taken out a loan before, and therefore have no credit rating.

If you won't use it, you'll be as well to just keep doing what you're doing 😀

Thoie

The main reason I have a credit card is for buying big ticket items that will be delivered later - e.g. sofas, holidays.

If I hand over €2k to a sofa company, with delivery due 12-16 weeks later, and they go bust in the meantime, I have little to no comeback. If I've paid for it on the credit card, I can get my money back from the credit card company. I can still use my savings to pay off the amount immediately (so no interest charges), but I have that added protection. If I paid for it by debit card, I'd join a long list of unsecured debtors, and be lucky to get a percentage back a year or two down the line.

sweet_trip

Mr.S wrote: »

Benefits are:
Fine if you have thousands in your current account (but who puts thousands in a current account)

Me apparently! 90% of all my money is in the current account.


thanks for the replies all. I never really considered the whole companies going bust thing. Might be handy for flights and hotels alright.

When you say it makes them practically free, does that mean the charges are little to nothing?
Is there a monthly fee for having the card even if I never use it?

myshirt

sweet_trip wrote: »

Me apparently! 90% of all my money is in the current account.


thanks for the replies all. I never really considered the whole companies going bust thing. Might be handy for flights and hotels alright.

When you say it makes them practically free, does that mean the charges are little to nothing?
Is there a monthly fee for having the card even if I never use it?

Annual stamp duty as long as you use it once. It's about 40 euro.

Ursus Horribilis

You'll be hit by an annual €40 government levy.

theteal

I can’t get a loan for 0%
There are quite a number of 0% credit cards.
Why spend my own money when I can spend the banks at no cost to me?

Ursus Horribilis

I was with Ulster Bank when their banking system went into meltdown 5 or 6 years ago. My wages didn't go into my account for a couple of weeks, though oddly enough my direct debits had no trouble leaving it. Having a credit card was handy because funds started running a bit low. I also prefer to use the credit card for things like car hire and websites I've not used before because of the credit limit.

seasidedub

As per other answers, you don't HAVE to have one, but I find it hard to fully understand how a 30 year old manages in today's world without one! I know you can book flights and hotels with a debit card, but car rental won't take debit cards as far as I know. Some hotels (particularly in the US won't take debit cards either).

If you get one and set it up as 100% direct debit, meaning that you pay in full each month, then you pay no interest but have the security of a large sum of money available to you if needed.

elperello

It's like a much used phrase now - a backstop.
Always handy if you need it.
Clear the balance in full each month and it only costs €30 pa.

sweet_trip

Mr.S wrote: »

Why do you have 90% of your money in an account that gives you nothing back?! At least get some % interest back no matter how small.

Credit card “fees” are the yearly €30 stamp duty, what I meant was that the rewards such as travel insurance, special offers and cashback % usually add up to at least €30 in a year, making it free to have a card.

You obviously pay interest as well if you don’t clear your balance in time (don’t do this)

Credit cards in Ireland are pretty basic things, we don’t have real incentive to use them like in the US.

By the sounds of it the CC account will give me nothing back either? I'll just end up paying €30-40 a year or more?
Also I really don't care much about special offers and rewards. I find those kind of things gimmicky and just an incentive for you to spend more money you don't need to. Just my personal outlook on things like rewards cards and things but maybe its different for banks.

As you said, we don't really have an incentive as such to use them.
Now that I think of it, the bank has never once even mentioned or offered me one via post or anything. So they mustn't be too pushed either.

seasidedub wrote: »

I find it hard to fully understand how a 30 year old manages in today's world without one! I know you can book flights and hotels with a debit card, but car rental won't take debit cards as far as I know. Some hotels (particularly in the US won't take debit cards either).

I've been all over the world. Booked hotels, flights, restaurants, atms you name it from the USA to Asia and the middle east. I've never once before encountered anybody who wouldn't accept a visa debit card. I've simply never had a single NEED for it.
I've never rented a car however. So there's that.

Maybe I should be counting myself lucky I don't have one.

Heebie

There is an enormous advantage to using a credit card instead of a debit card.
Using a debit card is considered spending cash. There is very little recourse available if you get detective goods, poor service, or get completely ripped off. Your bank may, but it's under no obligation to, refund money in the event of fraud. With a credit card transaction, fraud is not your responsibility to bear the cost of. With debit, it generally is.
With credit, if you receive defective goods, no goods, or unsatisfactory service, the bank is equally responsible for getting that money back, and can perform a chargeback to get the money back forcibly if needs be.

So, you have a great deal more protection for yourself when using a credit card

On top of that, using your credit card, and paying it off every month, looks fantastic on a credit report if you're looking for a loan or mortgage at any point later on.

Keeping it charged up to the max and missing payments... not so much so don't do that.

Charles Babbage

Q:Is there any point in getting a credit card?
A:Yes, if you want to rent a car.

Sarn

The advantage to me was when making large purchases. PTSB only allow a maximum transaction by card of €2500 per day. This can be exceeded with a credit card.

If caught by credit card fraud, it’s not your money that’s taken.

Most people I know would clear any outstanding balance every month.

Useful as a backup when travelling and where debit cards are not accepted.

pwurple

Insurance really. Far easier to claim back on a credit card, or put a stop on a payment on the CC than on a debit card. Renting a car.


Also, OP, not a good idea to keep large amount of funds in a current account. Even put it in an instant access savings account.... A simple direct debit error on the other side with an extra zero can clear you out and take months to recover the funds. I used to work in a bank processing center, it happens quite frequently!

lawred2

Thoie wrote: »

The main reason I have a credit card is for buying big ticket items that will be delivered later - e.g. sofas, holidays.

If I hand over €2k to a sofa company, with delivery due 12-16 weeks later, and they go bust in the meantime, I have little to no comeback. If I've paid for it on the credit card, I can get my money back from the credit card company. I can still use my savings to pay off the amount immediately (so no interest charges), but I have that added protection. If I paid for it by debit card, I'd join a long list of unsecured debtors, and be lucky to get a percentage back a year or two down the line.

http://www.moneyguideireland.com/protection-when-buying-with-debit-or-credit-cards.html

I thought this before but I'm not sure that it's the case here. It's a UK regulation.

Both credit and debit cards should be subject to the same charge back process

I'd use credit anyway just in case there's a need to invoke a chargeback as I won't have to wait for money to come back around to my current account.. it'll just be something that reduces my credit balance.

Thoie

sweet_trip wrote: »

By the sounds of it the CC account will give me nothing back either? I'll just end up paying €30-40 a year or more?

Using the AIB platinum card as an example, it gives 0.5% cashback if you spend over €5,000 in a year.

Annual stamp duty is €30, so if you put €6,000 a year on your credit card (and pay it off in full each month), the net cost to you is zero. The €6,000 can be anything, and doesn't have to be all in one go.

Anyway, no, there's no need to get a credit card. It's a personal choice, but they're not limited to people who can't afford to pay a few thousand in one go. The banks make their money (in interest) from those people, but there are other, non-gimmicky benefits to having one.

firemansam4

I've only ever needed a credit card for one reason and that is to rent a car.
And then after doing some research I actually managed to get one rental company to accept a debit card.

Anything else I've been fine with my debit card.
Even when a company went bankrupt after paying for a gift experience activity worth 120 euro, my bank was still able to get me a 100% refund, although I had to wait a little while to get it sorted.

jack of all

If you can clear the balance in full each month and are a good money manager a credit card is an excellent tool in helping to manage cash flow, in my experience. I would use it for large purchases, online purchases, car hire and whenever I've had cashflow issues (unexpected car repairs/ household appliance goes wallop etc)- BUT I always clear the balance in full each month and incur no charges other than the Government duty. I would never use the card for grocery shopping, petrol or eating out- if you can't pay for these items in cash you're in trouble!

Thoie

jack of all wrote: »

I would never use the card for grocery shopping, petrol or eating out- if you can't pay for these items in cash you're in trouble!

I don't use my CC for those things, but if you had a direct debit set up to clear the balance every month, with cashback offers it wouldn't be a terrible idea. For example, if you put €100 of groceries/petrol on the card each week, that's €26 cash back at the end of the year, which is most of your stamp duty.

I think there's a big difference between "I have €100 in my current account for this, but I'm opting to put it temporarily on my credit card" vs. "I have €60 in my current account, but I'm going buy €100 worth of stuff on my credit card".

hanaimai

Just on the car rental thing, there is a way around this. I don't have a credit card and have rented a couple of times. Some companies (haven't used them all so can't say all) won't require a card to place a hold on if you purchase the excess waiver which reduces the amount you owe in the event of a claim to 0. The last time I rented (last year), the excess waiver was less than 20e per day I think. To me this was a good trade off for not having a hold of 1500+ on a card, and it actually paid off for me in the end as I was involved in a minor accident that caused some damage to the rental car but didn't have to pay anything.

theteal

jack of all wrote: »

If you can clear the balance in full each month and are a good money manager a credit card is an excellent tool in helping to manage cash flow, in my experience. I would use it for large purchases, online purchases, car hire and whenever I've had cashflow issues (unexpected car repairs/ household appliance goes wallop etc)- BUT I always clear the balance in full each month and incur no charges other than the Government duty. I would never use the card for grocery shopping, petrol or eating out- if you can't pay for these items in cash you're in trouble!

I know it's a completely different market here in the UK but I'm about to get a new CC for these exact things. Cash back for money I'm already going to spend, well if they're giving it away it'd be rude not to. Reward Card

ShlugEireann

sweet_trip wrote: »

Me apparently! 90% of all my money is in the current account.


thanks for the replies all. I never really considered the whole companies going bust thing. Might be handy for flights and hotels alright.

When you say it makes them practically free, does that mean the charges are little to nothing?
Is there a monthly fee for having the card even if I never use it?

I have 80k in a current account. lol


Don't know what to do with it. Just grew.

sweet_trip

Thoie wrote: »

Using the AIB platinum card as an example, it gives 0.5% cashback if you spend over €5,000 in a year.

Annual stamp duty is €30, so if you put €6,000 a year on your credit card (and pay it off in full each month), the net cost to you is zero. The €6,000 can be anything, and doesn't have to be all in one go.

Anyway, no, there's no need to get a credit card. It's a personal choice, but they're not limited to people who can't afford to pay a few thousand in one go. The banks make their money (in interest) from those people, but there are other, non-gimmicky benefits to having one.

There's honestly no way I could see myself ever spending €6000 on a CC, prob not even 1000. Not in the foreseeable future anyway.

From the all the previous posts I've been reading I'm thinking maybe a savings account would be more suitable for me.

sweet_trip

ShlugEireann wrote: »

I have 80k in a current account. lol


Don't know what to do with it. Just grew.

It's funny, because to me thats a huge amount! Jesus if I had 80k i'd be laughing.
Although if I was 20 and I ever for a moment though't I'd have over 30k in the bank I'd also be amazed and laughing.

Now a days it honestly doesn't feel like much at all. I don't want to blow it on anything big. If I had 80k maybe I'd buy a new car or something, but realistically I'd probably feel the same and not want to spend any of it.

Thoie

sweet_trip wrote: »

There's honestly no way I could see myself ever spending €6000 on a CC, prob not even 1000. Not in the foreseeable future anyway.

You'd have to deliberately decide to start putting "daily" spending on it. The main thing is to always clear the balance each month. I'm not comfortable with that idea myself, and don't do it, but it would negate the €30 annual stamp duty if you were really that fussed.

sweet_trip wrote: »

From the all the previous posts I've been reading I'm thinking maybe a savings account would be more suitable for me.

Something like a 7 or 30 day notice account for the bulk of your money might be worthwhile. With interest rates so low, no deposit account is going to give you much interest (and you'll pay DIRT on the little it earns). It's still better than just sitting there not earning anything at all. Take a look at https://www.bonkers.ie/compare-savings-accounts/ for a few ideas.

As an example, €30k on a 0.15% AER for a year, will earn you €45 in interest - or about €26 after DIRT. It's not going to buy you a helicopter, but it's still more than the zero you're currently getting.

ShlugEireann

35 day notice account looks good on KBC right? I'm not with KBC though...that doesn't make a difference?

Thoie

ShlugEireann wrote: »

35 day notice account looks good on KBC right? I'm not with KBC though...that doesn't make a difference?

Banks are always eager to take your money! They may (like any other bank) try to persuade you to change to their current account as well, but it shouldn't be necessary. They might invite you to a financial review, where they try sell you insurance, or a pension or any of their other products. There's no harm in having a financial review, but don't be scared into signing up for anything on the day. Go home and give it some thought. For example "income protection insurance" might be worth it to you, but if you have no dependents, life insurance might not be.