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?

Keeping my outgoings as low as possible (800pm) has meant we have managed to keep ourselves afloat during covid when neither of us were furloughed but H lost his bonus and was on his basic. I always aim to be able to manage on one wage.

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.

If you buy from retailers that aren't building finance into the price, you will get a better quality sofa for the money or a lower price for one of the same price.

"0% interest" is a marketing gimmick. you are paying interest you just don't realise.

I use a credit card to build up my credit rating in anticipation of getting my first mortgage - I have been told never using credit could make you an unattractive prospect for lenders, as they have no information about you.

I put my weekly shop on there and pay it off in full every month. Nothing to do with living outside my means, as I could just as easily put it on a debit card.

The best thing for your credit rating is to pay on credit card and pay it off in full each month. I also use cashback cards so get cashback and all the protection credit cards offer

@Juno231

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?

Generally I have found that the 0% finance rate on things tends to come with a non negotiable price. Pay up front and the price can come down as the retailer is not funding the credit. This tends to be about 10% that I have managed to negotiate off which beats my savings rate.

the retailer is not funding the credit

The retailer isn’t funding the credit in any case, they use companies like Ikano that pay them commission. Car dealerships get paid commission on credit deals too which is why they’re not keen on discounting for cash sales, it’s a double whammy for them.

Never used credit. Money goes in account, I spend some, I save some.

I mean, mortgage doesn't count.

But no credit cards, no loans, no catalogue payment plans etc.

Most people who claim "everyone" does something only know about six people and they're all family. It's such a stupid thing to say.

The retailer isn’t funding the credit in any case, they use companies like Ikano that pay them commission.

How do you think ikano is making any money

All credit costs, whether its hidden in your price or not. There is no free money.

It can be low cost. But given that its flat rate (same for all customers) when its absorbed into the headline price, and places like DFS sofas dont require a perfect credit rating, it wont be the cheapest finance out there. When you buy there you are paying the sort of interest rates the finance provider is willing to offer to a huge proportion of people, so not the most competitive rates.

Ikano makes money from store cards with outrageous interest rates and massive penalties on defaults. One part of the business feeds another. Same with Klarno. HTH. ☺️