Should I Get a Credit Card?

pennypincha on 17/03/2016 - 13:48

I'm 26, never once had a need for a credit card.

It occurred to me that a credit card might be beneficial now that I have a mortgage with an offset facility. My thought is that I'd be able to use a credit card for regular purchases, allowing funds which would ordinarily be deducted immediately from my transactional offset account to sit in the facility for the duration of the credit card's interest-free period (usually 60 days, yeah?) and therein reduce the interest accrued against the loan.

Thoughts? Is it worth getting a credit card? If so, are there any other reasons I ought to consider one (rewards, frequent flyer etc.)?

Poll Options

  • 2
    Yes, spending money you don't have is great!
  • 65
    Yes, just be sure to pay your CC bill before interest accrues
  • 7
    No, use cash if you have it. CC's are a waste of space in your wallet
Financial Credit Card

Comments

  • tomleonhart on 17/03/2016 - 14:16
    +8

    Voted for Yes, just be sure to pay your CC bill end months end.

  • elusive on 17/03/2016 - 14:23
    +3

    Remember that an interest-free period is "up to". It doesn't start from when you make the purchase. It starts at the beginning of that billing month and ends when your bill is due, and if you don't pay the bill in full then the next bill has no interest-free period at all.

    tl;dr: always pay the bill in full before the due date if you want to use the interest-free period

    • humdingaling on 17/03/2016 - 15:27

      eg
      pay the amount on your statement or it can become expensive real fast

    • pennypincha on 17/03/2016 - 16:39
      +2

      Oh wow, that's confusing! Would never have known, thanks for that

      • oscargamer on 17/03/2016 - 17:03

        :)

      • CheapskateQueen on 31/03/2016 - 00:39

        Just pay the amount listed as "closing balance" in full each month, then you never have to worry about how many days you're getting interest free.

        Set you credit card to direct debit the closing balance from your offset account automatically each month and you're sorted.

        Just monitor your spending the first few months to see if you're changing your spending habits (spending more inadvertently) bcos I'd the card. If you are, get rid of it.

  • oscargamer on 17/03/2016 - 14:32
    +1

    Absolutely yes. That's exactly how we use ours. But as already said, you must pay it off every month or it doesn't make financial sense.

    • pennypincha on 17/03/2016 - 16:41

      Nice to know others before me have had the same thought, thanks!

      • oscargamer on 17/03/2016 - 17:04

        we went with a fee free CC and didn't even bother with a points one

        you might be a points person ?

        let us know how you go

  • Thefreshprince on 17/03/2016 - 14:39

    Yes

  • Evil-Elmo on 17/03/2016 - 14:44
    +1

    If you treat your credit card purchases the same as cash purchases (i.e. don't use it to buy stuff you can't afford) then they're great. You get convenient payment, a decent interest free period, and, depending on the card, perks and points. For a first card I would aim to get something fee free.

  • donbot on 17/03/2016 - 15:03

    The biggest risk to all of this is increasing spending by not tracking what you put on the credit card vs what you use for cash, as not everything is able to be put on credit card.

  • osaya on 17/03/2016 - 16:39
    +1

    ditto with most other comments here. as long as you manage your CC payments well, it will serve you well. but if you're new at this, there is a good chance you will mess up at one point or another, e.g. missed payment by a few days etc., and then have to cop a penalty fee of some sort. you could always speak to them to waive the fee the first time you do it, but they will be good learning experiences.

    oh, also be careful about all the various fees, such as annual fees etc.

  • folken on 17/03/2016 - 17:02

    A credit card is fine to use as long as you pay the bill on time. Just schedule the automatic full repayment via your internet banking.

  • AusSam on 17/03/2016 - 17:07

    We used to use credit cards, still do for those automatic payments but am switching to withdrawing cash each month and only use that as a way of budget.

    Although I always paid off credit card each month - credit cards, pay wave and pass pass make it too easy to just "chuck it on the credit card" and YOU WILL end up spending more - guaranteed.

    We have only just started using cash but we have worked out we can save between $800 - $1000 per month by just using cash and budgeting.

    And don't think that credit card points are worth it - the money you save can get you 3 - 4 times the flights or rewards.

    Banks are evil - don't ever ask them for financial advice. They only ever benefit themselves.

    That is only my opinion.

    Sam.

  • Randxyz123 on 17/03/2016 - 20:23

    As others have said pay your bill on time and you'll be fine.

    Put a limiter on it so you can't go crazy.

  • [Deactivated] on 18/03/2016 - 08:14

    Just say no

  • lysp on 18/03/2016 - 14:34
    +1

    If you're good with money then definitely get a CC.

    What you want to get is a "rewards card" and put absolutely everything you possibly can on that card.

    Then pay it off in full (closing balance) each month.

    Main benefits are:
    - You get rewards points for every dollar spent
    - You get 30-60 days of additional cash in your offset (like you said)

    And additionally:
    - You get charged no interest if you pay it off each month
    - You have tracking in mostly 1 place of all your expenditure
    - You may get insurances on your purchases (depending on card)
    - You have safety of being able to "charge-back" a purchase if something goes wrong (ie. non-delivery or fraud)

    What you can also do is get your credit card to automatically be paid from your offset account, so it's basically set and forget.

    Main thing you need to do is not over-spend compared to your old spending habits. If that stays the same you'll be fine.

    By getting the rewards points, it means you're actually profiting by putting your spending through the card and may end up (depending on spending levels) a few hundred dollars up from not having a card.

  • goosegog on 18/03/2016 - 16:00

    Unless you want reward points - opt for one without an annual fee, ENSURE YOU PAY IT OFF EVERY MONTH . That way you will never have to pay any fees for the privilege.
    We have an Ignite ( through Westpac - used to be Virgin ) - don't get points or pay any fees - it's just handy to have.
    The other benefit of having a credit card is for your credit reference for any other major purchases you may wish to make in the future.
    Also when you spend time away from home - hotels always want an imprint of your credit card for security reasons.
    Buy on line? - a lot easier with a credit card.
    For us, our only complaint would be with the PayWave facility, which means anyone can use it should it be mislaid - but this asking for trouble facility is also on all of our normal everyday cards. Should be stopped.

  • stickyfingers on 29/03/2016 - 19:52
    +2

    I've got a Coles no annual fee MasterCard with the purchase protection (you can opt in and pay an extra 1% on your purchases).
    A few weeks ago I smashed the screen on my phone I purchased a couple months ago using it and they paid for the ~$200 screen replacement.

    There's plenty of more benefits, like for that card I get price protection. My AMEX card saved me heaps during the 'Shop Small' promotion.
    Other cards give you loads QFF points for signing up. My Coles card got me $100 off a shop at Coles.

    Just don't apply for too many at once or you'll kill your credit rating. And don't forget to pay them off!

    • pennypincha on 29/03/2016 - 20:08
      +1

      thank you, very helpful. Am leaning toward the Coles no annual fee card, seems to be a pretty good deal.

      • stickyfingers on 29/03/2016 - 21:04
        +3

        No worries!
        I wasn't 100% set on if the benefits of a credit card were worth it when I was looking into them. There's a bunch of useful stuff on the thread I made here.

        From the whole process of getting multiple cards and using them I'd sum up these points:

        • Have a credit card that has purchase protection/price protection (like the Coles one with Account Cover), this usually incurs a fee (1% with the Coles MasterCard) so keep that one purely for purchases you'd like the protection for.

        • AMEX cards are super handy to have for the Statement Credit offers. You'll also generally earn more frequent flyer/rewards points paying with AMEX. Plenty of places (especially large stores like Woolworths) accept it now too.

        • Sit down and work out which cards to use when. For me I get more value from using my ING Direct debit card with the 2% cash back for Paywave purchases under $100 as compared to getting QFF points. Where if I'm buying something online or over $100 I'll use my AMEX to get the points instead. Then if I'm making a large purchase I think I'll be able to claim price protection on (like a phone, computer or fridge) or I think it'd be beneficial to have some insurance (purchase protection) on, I'll use my Coles MasterCard. You can read more about the Coles MasterCard account cover features here.

        • Always sign up using a bonus or referral offer (like 50,000 QFF points or $100 off a Coles shop).

        • Watch out for annual fees, most cards charge them but have a 1 year free period make sure to call up and cancel before it renews. Some people have had success getting the fee waived for another year when threatening to cancel too.

        • Make sure you fully understand how the interest free period works as it might be worth while holding off on some purchases until your next statement period if it's coming up soon. There's a great guide to them here and here.

        • Be mindful of your credit rating and don't apply for too many cards too often. You can check your credit rating for free on sites like Credit Savvy.

        • Pay your statements in full a few days before the due date to avoid late fees or interest incase you forget or there's a problem sending your payment.

        • Don't spend what you don't have

        They're absolutely worth taking advantage of and are really simple to manage. As long as you only spend the money you have the benefits are awesome.

        • CheapskateQueen on 31/03/2016 - 00:44

          This is a great post for veteran credit card experts like us. But i would be weary of the OP going this full on straight up.

          I'd recommend for a beginner to focus on a fee free (no reward points) card to test it out and track spending, repayment history etc S/he should focus on the offset savings first.

        • stickyfingers on 31/03/2016 - 03:51

          @CheapskateQueen: Absolutely! There's plenty of cards suitable for all different uses. As you said, getting a fee free one is the way to go to get into it. You can always add benefits and get new cards as you need.

        • pennypincha on 31/03/2016 - 12:00
          +1

          This is single-handedly, the most useful OzB comment I've ever read. Thanks stickyfingers!

        • bluedufflecoat on 31/03/2016 - 20:33
          +1

          @Catchy: and if you decide to take up one of the Amex cards, particularly a free one, try the Amex QFF discovery card and get additional referral points here…

          https://www.ozbargain.com.au/wiki/american_express_referrals

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