Do you cash flow or use credit?

[holdthephonio]

Conversation with a friend who suggested that EVERYONE uses Credit of some sort like, credit payments (sofas etc) , credit cards, overdrafts, loans etc I have personally never used any of them (to which she was astounded!) For me it's simple if I don't have the money then it doesn't happen. I save for everything.

Do you cash flow everything or use credit regularly?

Interest free credit always if it’s available, the money’s better in my account than theirs. If you could clear it tomorrow but choose not to, it’s not debt. Our cars are pcp at 0% too. Every day spending - food, petrol, etc goes on the credit card and gets cleared every month.

Credit card. All the time, but it is paid off in full every months. Basically I know I can spend x and that's it.
But the CC unlike DC provides some extra security, especially on big purchases, and there are incentives like points or cashback.

Simply put, if you can manage not to overspend, which let's face it most adults should, credit card can be really good thing.

I don't understand the stigma of credit cards, as if they are bad.
They increase your credit score.
You are better off buying certain things on a credit card. You get more protection.

Ours has always been paid off monthly by direct debit.
I think op is missing a trick here!

We've used lots of ways to pay for things over the years. Credit cards, loans, cash advances, cash, overdraft... we've done them all depending on what situation we have been in at the time. We are now in the position of having paid off the mortgage and our spending is much less than it used to (if you don't count two sons at uni), But, it took us 36yrs to get to this point.

Credit is useful. And sometimes it's unavoidable. And, as someone pointed out already the protection and the deals are much better.

My in laws had never had a penny debt or used any credit agreements. When FIL died MIL wanted to take advantage of an interest free offer on some new furniture but she was refused because, at the age of 78, she had no credit history.

I use a credit card for online purchases, just for the security benefits, but it's paid off automatically every month.
Otherwise, if I don't have the money, I don't buy the thing. I save up until I can afford something.

The only thing I could ever foresee myself getting finance on would be a car. In case I suddenly needed a new one, and didn't have the savings.

I'm another from the 'if you want it, save for it' and 'if you don't have the money, don't get it' school of thought.

The only time I will ever use a CC is if the item or service I'm buying is over £100 and I want the section 75 protection, but if I don't have the money in cash flow up front to pay it off then I won't even get it on a credit card.

@Oblomov20 I don't really feel I'm missing anything, I have managed to obtain a small mortgage and pay that off already (I worked abroad for a few years to save most of my house purchase costs) I realise I am very lucky but I never found my lack of credit restricting.

Cash. I dont have anything on credit.

I tend to use cash in the shops. I take out £x amount for the week and i make it last. I budget well with it. When i look at my online banking there isn’t much trace on where i spend. And I prefer it like that. None of the bank’s business where i spend.

You get better protection is the goods are faulty/go missing/business goes bust, from a credit card.

And it improves your credit score.

Martin Lewis advises using one for certain transactions.

It's good sense. I'm sure you can get by, and haven't lost out. But your missing the point. The two reasons given are why they should be used.

I suspect it's quite common these days. Personally I don't use credit apart from the mortgage and I've bought cars on 0% finance deals in the past. The current one has a very small car loan on it because I applied for a new credit card with 0% interest on new purchases and it didn't arrive in time so it was a bit of a last minute panic thing. I could probably clear it but the interest is so low at the moment the early repayment fee might be more than sticking it out for another few months. I use the credit card for online shopping and the protection it offers on holidays etc but always pay it off in full.

Now I Cash flow.

Wasn't always that way though, prior to finding Dave Ramsey in 2017 I had a car on finance and used a credit card.

Credit for anything over £500 but is paid off in full. And I use the credit card for the points. I do have a car loan and a mortgage.

I use my credit card for everything, but it is paid off every month so I never pay any interest. The credit card has a cash back facility - so I also get money into my account every month from my credit card company just for using the card to buy things I was going to buy anyway.

Since I've had the card I've received almost £1000 just for using it. What's not to like?

If I buy a large item I always get it on interest free credit. I have the money to pay for the item, but prefer to release it slowly so my account gets the interest 🤷‍♀️

I also have a Boots card, a Nectar care and Sparks Card. All used in conjunction with my credit card. So I get cash back on my credit card and points on the loyalty cards which gives me lots of free goodies. I get plenty of treats throughout the year.

I don't understand why people don't take advantage of cash back credit cards and loyalty cards. It's free money and goodies!

I use a credit card and pay it off every month.

I do occasionally buy things on credit if it’s interest free or very low rate and I am confident I can afford to pay it off in a short period of time.

I put everything I buy on my credit card. It is paid off in full when the statement comes in. I get loads of vouchers from John Lewis 3 times a year from it. I make my credit card work for me...i know a lot if people who worry they will go mad with it and not pay it off.

You should have a credit card, simply to make your finances appear more stable to certain sectors (ie. mortgage lenders), but of course that only works if you pay it off.

@Oblomov20 my credit score is in the 800's do I don't see a problem

Also I am not in the U.K. so the whole credit card providing more protection doesn't apply here. I just use debit as they are the same here and you just do a charge back (which I have never had to do)

I never use my credit card. I’ve been down that road before in the past and it’s a longer road to crawl up than it is to zoom down.

I’m in a much more fortunate position now and paid them all off. It can just accumulate too fast. Also had a couple of friends get in to a lot of debt through CC. One us still paying the price now and is in debt up to her eyeballs.

Having said that, it is good to get a credit card to buy something on it (but clear it as soon as the bill comes through) to show lenders that you use them wisely and pay off the debt. It can increase your credit rating- in fact it does increase it.

But yes, I’m now of the opinion if I cant afford it, I can’t have it.

Mortgage paid off. No loans, savings in bank to cover any eventuality that isn't insured. Will put more expensive things on credit card just to be covered, card always paid off. Never buy anything worth a sum large enough to pay in installments / interest free credit., and often tend to buy second hand things eg cars but keep them for years (car I'm driving at moment is 23 years old was new to our family previously owned by an older relative now given up driving so mileage is only 80K).

No credit at all, too much interest!!

I have a cash back credit card which pays 1% on supermarket shops and direct debits and 0.25% on everything else. It’s worth about £8 a month and I pay it off in full each time.

@TimeWastingButFun

No credit at all, too much interest!!

I haven’t paid a penny of interest for years. There’s so much 0% credit available only an idiot pays interest.

YABU. Cash flow isn’t a verb.

I have never been a fan of credit.

If I wanted something I saved up and paid for it.

I didn't have the "normal" credit most people get though like student loan or mortgage so I began encountering issues as because I didn't have a credit history I got rejected for simple things like a phone contract (before I'd been on pay as you go) and a catalogue cancelled an order even though I paid in full and wasn't wanting the item on credit. I was a bad gamble because companies had no way to feel confident that I would pay it back as I had no history.

So I got a credit card with a low limit and now pay for my grocery shopping with it instead of my visa but pay it off the same week. No interest.
I used it at different times to pay for cooker, fridge etc then paid it in full straight away.

I also bought a computer on finance (with very low interest) so it cost less than £100 more than if I'd bought it outright.

I now also have a phone contract. A small one.

These things are all things I would have paid in full but by doing it that way They cost the same (except for a couple of item) but they all build my credit rating for the future if I need it. plus the section 75 for bigger purchases like my cooker is handy.

@holdthephonio

Credit scores are fictitious numbers that credit reference companies make up in order to get you to purchase/sign up for products through them. They mean absolutely diddly squat. It's what's on your credit record that makes all the difference. Lenders couldn't care less what your score is.

Eg. My credit score on Experian is 878. Excellent score. Clear score (Equifax) is in the 700's classed as good. Trans Union is on in the fair bracket. I just applied for a AIP on a mortgage and was turned down by an Experian only check lender due to a default for £20 on a very old Npower account. And that is with an "Excellent" score with the credit reference agency.

You may find that if you do need credit in the future that you will be turned down because you have no credit history at all. Doesn't sound like you would need to, but just to demonstrate how pointless scores are.