Debt

[StaryNight1]

Once I pay off my credit card I am probably never using one again. Started off with one to spread the cost of a washing machine after it broke. Then relied on it for little things and ended up racking up loads of debt. That’s how they get you

congratulations on paying it off.
but cc companies don't force you in any way to use it.
"they don't get you", you let your guard down and you take liberties.

I would absolutely never be without a card for emergency purposes.

It depends on your circumstances and personality.

If you're using the card to bridge the gap because your essential outgoings exceed your income, that's always a recipe for disaster.

Likewise if you see it as 'free money' so use it to buy yourself a better lifestyle, with more stuff, leisure or more expensive food options like eating out, lunches or takeaways.

But the fact remains that the majority of people who have credit cards use them solely as a payment tool and pay them off in full every month so that it benefits their finances, either to gain points, spread the cost for free (rather than use an expensive overdraft), get purchase protection or as a deposit for a car hire or hotel rooms instead of having to leave them the contents of your current account.

But if you're unable to use them that way, then perhaps a CC isn't for you. I've never paid a penny in interest on credit cards in over 20 years. In that time I've made thousands in cashback and interest gained from saving money borrowed at 0% interest. I've also claimed from my credit card when Monarch went bust 2 days before we were due to travel with them and we needed to buy very expensive flights at short notice at the same time as thousands of others, to save our holiday.

I have had a (or more than one) credit card for >35 years. I have never once paid even 1 penny of interest because I never used it to "spread the cost"

if you do not have enough cash to cover something as mundane as a repair bill on a modest item such as a washing machine, then you need to take a very serious look at your lifestyle and on what you are spending your money.

you need to learn how to save money for a rainy day...

"they" do not get you, you got yourself.....

I could have written this myself!

Had my CC for well over 30yrs and have never paid any interest.
Practically everything after bills is paid for on the CC (fuel, shopping, on-line purchases etc) but the whole balance is automatically paid off by DD at the beginning of the month. Gives financial security (have had to claim a couple of times due to shops going bust) and the loyalty scheme allows me to build a nice little bonus.

I agree OP, many people rely on them and add bits here and there and then end up in trouble. Well done on paying it off

In mumsnet land everyone is super financially savvy and never gets into debt for anything.

In the real world companies bombard people with card adverts showing how easy it all is, and it’s very easy to borrow a little, not pay it all at once, add a bit more because something came up and you were skint, and so it goes. And before you know it you’re making the minimum payment, which is mostly interest, and the hole just gets bigger. Getting out of the hole means either throwing everything you have at the debt and then being very careful not to fall back in, or consolidating the borrowing - which usually means getting in a bigger mess, because spending habits haven’t changed.

You only need to look at consumer borrowing rates to see that many, many people use credit cards as credit - you’re not alone. Well done on paying it down and good luck for better choices, and fortunes.

Hope you're close to paying off the CC soon, @StaryNight1 . As PPs have said, credit cards can actually be a really helpful source of credit. But for some people they do cause problems - eg if the CC is not paid off in full every month, or just the minimum is paid, and the APR is not 0% .

It's important to think about what you'll do in future if you need a new washing machine (and you've ruled out just paying to repair the broken one).

I guess the ideal might be having enough savings in an easy -access savings fund so you can painlessly replace whitegoods etc (and paying into that fund every month).

But if not, do think carefully about accessing other types of credit - because using an overdraft is probably worse than a CC for various reasons and 'buy now, pay later' options can work out to be more costly than a decent credit card.

I've had a credit card since I was 19. I'm now in my 60's and I've never got into difficulty with it. In my younger days, I used it to buy necessary household items, but only what I could afford the repayments on. I've even bought things on interest free loans, cars on HP and had 0% credit cards, but i have never been in financial difficulty. I have always been in control of my spending and repayments.

Just to echo OP, they are difficult and loads of people have issues with them. Well done for working on paying it off! I’m in a similar position, had a bit of borrowing on 0% for emergencies which then spiralled when I was furloughed and the 0% finished. Still paying it off now and only after a massive change in income am I making a dint in it. Previously struggled as it was impossible to save for emergencies and pay over minimums, on top of increased household bills.

Well according to this article the average debt in the UK as of February this year was £8,283 and that excludes Student Loans and Mortgages so clearly the replies on here aren’t representative.

How long is it till you clear the debt @StaryNight1? And well done for tackling it.

but cc companies don't force you in any way to use it "they don't get you"

Oh come on!

They entice people with years long interest free credit on purchases, take only a minimum each month in repayment then bam! at the end of the 2 or 3 years start charging 29% interest.

No problem for the financially savvy but they're set up to ensnare the majority who do not paid their cc off each month.

OP - save £1000 into an emergency fund so you've got the money should the washing machine break or you need a new set of tyres. Then clear your debts. Credit cards aren't for everyone.

you may shout me down but oh come off it, "no problem for the financially savvy"?

does not require much savvyness to understand that 29%+ interest at the end of a free interest period means you are going to have to pay a LOT of money if you have a balance owed at that point.

Financial awareness is not the problem, the problem is the I want it now culture that never existed in the old days when people knew how to do without, or to save up for what they needed (not necessarily wanted).

does not require much savvyness to understand that 29%+ interest at the end of a free interest period means you are going to have to pay a LOT of money if you have a balance owed at that point.

Financial literacy is very poor in the UK. Millions genuinely don't understand APR and the implications of buy now, pay later. You might want to deny it but the credit card companies know it's real and they prey on it.

The problem is also need it now - the washing machine breaks down and can’t be repaired or the car you need to get to work breaks down. It would be fine if people did have an emergency fund but too many are living hand to mouth and end up having to use expensive credit for essentials.

sorry but lack of an emergency fund just says: I was living beyond my means in the past and failed to set anything aside because i was too focused on want, want, want

I accept there is probably a strong generational thing in play, my parents brought me up to know the value of money and what you can afford, not want.

Bang on for you pal and your charmed existence.

There are still laundrettes for people who can’t afford a washing machine. People all over the world use them when they can’t front the cost of a machine

Hi OP. I'd like to thank you for posting, it's given me a perfect excuse to show everyone how wonderful I am, whilst simultaneously denigrating you and any of your feckless mates.

I've had a credit card since 1970 and have always used it sensibly- never paid any interest; although I have collected 300k green shield stamps. Just born better I suppose.

I'm aware that my posts probably don't actually help anyone in debt, but it does give you poor dears something to aspire too doesn't it? Just don't tell me about your tale of getting out of debt or I'll berate you for getting into trouble in the first place.

indeed, I do actually own 2 mortgage free properties having done without in order to clear the debt.
One is now let and a useful source of extra income.

I've had a credit card since 1970 and have always used it sensibly- never paid any interest; although I have collected 300k green shield stamps.

😂 very good.

GSS beat air miles any day!

I recently decided to stop using my credit card, so I can tackle the debt. I started off paying it off monthly but I then spent more. Finally decided no more, I need to pay it off and build my savings. I did stop using them before and saved a house downpayment then after that I went back to them. Since that worked for me before, gotta do that again. Good job for you too OP.

The laundrette in my town consists of two machines in a garage forecourt. Not exactly helpful if you’re a mum with small children who need supervised.

Yes it would be great if everyone had an emergency fund for things going wrong, but it’s not always possible for people to save when money is very tight. Good for you if you’ve never been in that position - I’m sure that’s entirely due to moral superiority and not because you’ve had higher earning power, family help, coupled with no massive financial adversity, disability or joblessness.