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?

Mostly cash flow - I use my credit card to pay for items but have the cash in my account and pay it off every month, but no transaction charges on CC but transaction charges on current account so it's cheaper.

We had a mortgage (up to 2 months ago).

I have always paid for any car from savings. And holidays.

But DH, having managed to move away from credit for his cars 20-odd years ago, got his current one on PCP as he thinks it is best at present.

That car is the only item we have on credit though, other than our personal credit cards which are both paid off in full monthly and well covered by cash in current accounts. And separate savings for anything larger we want to purchase.

I had a personal loan when I started working and that was very very hard to pay off, (very low wages), so I was happy to get rid of it. And since then, I have preferred to wait until I have the money, mostly. We had enough savings to cover a reasonably large renovation we did some years ago, but DD was at an age where we needed money for different things for her and potentially had deposits for school needed short term, so I borrowed against credit union savings for that and kept the savings intact in case we needed them. But since that loan was paid off, I have kept it to a generally cash basis.

Credit card, paid off in full every month - I have an Amex cashback card at the moment so this earns me money everytime I use it. It also gives me protection on large purchases so it's logical really.

I understand why people are reluctant to use credit cards if they have little self control over spending or have a history of financial problems, however I don't understand why more people don't take advantage of cashback cards. You are still spending the same money, but getting a reward for it!

DP is very financially savvy, and has helped me get more for money in terms of savings accounts, credit cards, cashback etc - I was scared of credit cards when i first met him as I had it drilled into me by my grandparents that they were the devil!!

Mortgage only, everything else comes from cash flow.

I've always prioritised saving. My parents disapproved highly of debt and hammered home the importance of saving every single bleeding penny, so I guess I've always (mostly) obeyed. HAVING said that I did get a credit card a few years ago, spent a heap of money on crap and am still paying it off! So I didn't really learn haha. I really loathe using my savings to pay off my debt (I know!), so I prefer to use 0% cards as much as I can.

I now pay only with my debit card for things. I don't have a credit card any more (except the one I'm paying off) but I might still consider getting one in future ONLY for emergencies or travel.

@TimeWastingButFun

No credit at all, too much interest!!

There is so many 0% offers... The times of too much interest are gone unless you go for payday loans and such

Credit helps with credit score which helps with getting a mortgage. Im assuming you haven't got a mortgage though because you've bought your house for cash. 😝

Credit. It's good to use credit as it builds your credit rating. We didn't until we wanted to buy a house and realised our credit ratings wer rubbish because we didn't have credit history.

If I buy on-line I use a credit card but always pay it off in full every month. I save for cars, holidays and furniture and pay in cash but only because I've run up debt in the past and finally learnt my lesson.

The other thing about not using 0% interest for big purchases is that it’s factored into the price so by not using it, you’re actually paying more.

Save for everything. Debt worries/scares me - I stress that if I lost my job it would be a millstone round my neck.

The only debt I have is a mortgage which is for about 40-50% of the property value (based on neighbours houses sold last month). I do have a credit card but only use it for its payment protection attributes, I pay the bill in full immediately each time I use it.

Credit when 0%

I like to earn interest on the money sitting in my savings account rather than in theirs plus then I budget better as I factor it in as an outgoing each month from my salary rather than take it out of my savings.

I would never ever suggest people put stuff on their credit card unless they can pay the balance off immediately and they get some benefit from it such as cashback and points etc.

If you cannot afford something with your own money dont use credit. Simple.

Alsohuman
The other thing about not using 0% interest for big purchases is that it’s factored into the price so by not using it, you’re actually paying more.

I have in the past successfully negotiated discounts for not taking the 0% finance - retailers are required to account for the effective interest income at market finance rates separately in their accounts even if they describe it to the customer as "0%" so they know how much the real cash price of the item is. I've also taken it and prepaid the full balance when I've got home to ensure I don't overpay. This one is particularly worth doing if you want to pay cash for a car.

Credit helps with credit score which helps with getting a mortgage. Im assuming you haven't got a mortgage though because you've bought your house for cash. 😝

You dont actually have to really use the credit to benefit from a boost to your credit rating. If you just have a credit card and use it and pay it off same day this will boost your credit rating.

The notion that you need to use credit to build up a credit score is a myth as there is not just one set way that gives a credit score nor is there some mythical blacklist to stop you getting credit.
There are other ways to have a good credit score
Being on the electoral register Is a must
Having no bill defaults utilises, phone contacts etc and paying your rent on time
Savings and history with the lender if applying for a mortgage or loan.
Even not withdrawing cash on a credit card can improve your rating.

For most of our adult lives, DH and I lived on credit for almost everything. It was getting to the point where all of our excess income was going on debt repayments and we would never have paid it all off because we kept adding to it. A couple of years ago we sorted ourselves out and consolidated all the debt and it is now reducing.

We have one credit card which we only use if we want our purchase to be protected, otherwise we save for anything we can't afford from our monthly income. It has made me spend much less and I now buy a fraction of the crap I did before. I wish we'd done it years ago.

@NoIDontWatchLoveIsland

Alsohuman The other thing about not using 0% interest for big purchases is that it’s factored into the price so by not using it, you’re actually paying more.

I have in the past successfully negotiated discounts for not taking the 0% finance - retailers are required to account for the effective interest income at market finance rates separately in their accounts even if they describe it to the customer as "0%" so they know how much the real cash price of the item is. I've also taken it and prepaid the full balance when I've got home to ensure I don't overpay. This one is particularly worth doing if you want to pay cash for a car.

Retailers get commission on finance deals so push them really hard. I’ve never heard of anyone getting a discount for cash. Why would you pay off 0% finance immediately after the purchase? That makes no sense whatsoever.

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

I think OP isnt talking about people who use a credit card as a payment card but never run up a debt on it. They are talking about people who use credit cards and other lines of credit to buy things they do not have the cash for and repay over months or years.

Credit all the way. Why pay for something now that you can pay for later? In the meantime you could have your cash work for you in savings account (granted not in the current economic climate - but for years I had all my spare cash in 3% santander account) and get points or cashback on your credit card. Got our sofa on interest free credit as well - it was 0% interest and it meant I had a spare £900 in the account for other expenses in the meantime.

Unless you're really bad with money I think it's silly not to make use of credit?

My aim is always to keep my monthly outgoings as low as possible so I save and pay for everything upfront. I don't like to have insurance, sofas, car payments or whatever coming out.

Our only outgoings are mortgage, life insurance, utilities and the kids activities. I have a phone I bought outright (not fancy). My aim is to save up enough for the council tax upfront this year too.

I just feel like if I have more money left over then I'll save more.

Retailers get commission on finance deals so push them really hard. I’ve never heard of anyone getting a discount for cash. Why would you pay off 0% finance immediately after the purchase? That makes no sense whatsoever.

It makes sense if you do not like debt. Cars are a good example of where use of finance has given the manufacturers power over customers. They know that people tend to spend more when they borrow & pay monthly.

I assure you I have had discounts for paying cash although its becoming less common, which is why I now usually just take the finance as often they actually want to charge you more to pay upfront. I want the lower price but I dont want to borrow.

I just feel like if I have more money left over then I'll save more

I’m the other way round. Once it’s gone into savings I hate taking it out again.

My aim is always to keep my monthly outgoings as low as possible so I save and pay for everything upfront. I don't like to have insurance, sofas, car payments or whatever coming out.

Me too Yamashita!

It tends to mean I feel very in control of money and I save more. It also means if I lose job, my outgoings are as low as possible and i can last for a while.

I've got a mortgage if you count that as credit. Have a credit card and put everything on there, it's been great a couple of times over the years when I've had faulty goods from a dodgy company! I pay it back in full each month and it earns a few quid in cash back which we save up and splurge in M&S on Christmas treats.

Works for me!