Why Credit Cards

JoeBlack03 on 04/03/2022 - 19:09
Last edited 05/03/2022 - 10:55

Hi all,

I have never used credit cards, it always seemed too troublesome to maintain one (checking its balance, making monthly repayments), and too risky in case I forgot to repay it or something. The rewards didn't seem significant either (bonuses for random items, 2% cashbacks).

However, I saw that many credit cards have bunch of insurance covers attached to them, such as travel, car rental, etc. Did anyone have any experience using such covers? I just want to know if I'm missing on something important or not.

Alternatively, what are the most important credit card perks for you personally?

Edit: Thank you everyone for your insight! I will try few of the suggestions and see how it goes :D

Financial Credit Card

Comments

  • PissLUR on 04/03/2022 - 19:13
    +3

    free smartphone screen insurance - amex
    free international transaction fee charge - latitude 28 degrees
    free flybuys points - coles
    free kogan first membership - kogan money

    and the list continues

  • Drakesy on 04/03/2022 - 19:16
    +6

    The rewards didn't seem significant either

    Couldn't be further from the truth.

    A true Ozbargainer is churning through these as fast as they can get their hands on them.

    No other card can return roughly 20% of your expenditure in the form of gift cards/vouchers with up to a 50% return with frequent flyer points.

    I have enough for 2 round the world business class tickets purely off the back of credit cards. My advice is to go onto point hacks and enjoy the read.

    The insurances and lounge passes etc are all secondary.

    Also haven't flown economy for 4 years now thanks to these. (admittedly 2 of these were during covid.)

    • amrdeus on 06/11/2022 - 21:02

      I'm guessing you're referring to: https://www.pointhacks.com.au/ ? Looks great. I'm completely new to CCs. Can you give me a quick point in the right direction to help me filter out that website?

      All I know is that you want to pay it off right before the deadline each time.

      But, what's a good fee to pay? The website has a good calculator but I guess its a bit hard to get my head around things like "It costs me $1500 a year and rewards me $5000 of value, but is that actually saving me $5000? Or giving me value that I'll never spend?".

      How can I calculate if its worth the fees? For instance, to pay my bills with a CC it'd cost an extra processing fee of 0.45%. Is that worth the cost? For a $1000 bill I'd pay $4.5. Do the points really make this worth it?

      Any tips would be super helpful!

  • Master Bates on 04/03/2022 - 19:21
    +2

    I'll leave this here up to you what to do with it.

    Sure it's related to the American Financial Services system (we're heading in that direction) and it's about 4.5 years old at this point in time, but there is still some validity in his words.

    These days you can automate payment, what you need to be careful of is spending more than you earn.

    • hasher22 on 05/03/2022 - 02:11

      He said he uses a credit card to pay for everything but what type of credit card he has. He says he withdraws money and as you know here, it charges you a eff ton to get cash out, I assume there are your typical yearly fees and interest rates on his credit card. He also says he uses his credit card every day but he doesn't mention if he pays it all before the interest kicks in.

      I couldn't find any information of people in Australia paying off their balance in full, but an American 2021 survey found out 44% pay their balance in full. That's quite a high number and I thought it would be way less, maybe in the 20s.

      Am I not understanding his logic to always use a credit card? Cause I believe the majority of people will not pay their balance in full and not live within their means, thus fees and interest will just keep piling on.

      • mskeggs on 05/03/2022 - 08:38
        +2

        The logic is pay in full. Never carry a balance over.

  • Morien on 04/03/2022 - 19:28
    +3

    Besides the very good points previously made, there is the little matter of your security.

    A debit card has your money. Good luck getting it back in case your details are stolen.

    A credit card has the bank's money. It is in their interest to prevent fraud.

    • rektrading on 04/03/2022 - 20:11

      A CDC only has as much 💵 as the user deposit in the card.

      The rest of the 💵 is safe on a cold wallet, safe from fraud, theft, freeze, block, ban, seizure and sanctions.

      • WoodYouLikeSomeCash on 04/03/2022 - 21:58

        CDC?

        • threepaws on 04/03/2022 - 22:44
          +1

          Rektrading is huge into crypto.

          CDC means crypto.com . He's referring to the CDC card you can get with a stake worth thousands of the currency there, CRO

          • WoodYouLikeSomeCash on 05/03/2022 - 00:27

            @threepaws: But what does he mean by:

            The rest of the 💵 is safe on a cold wallet, safe from fraud, theft, freeze, block, ban, seizure and sanctions.

            The government or the exchange can easily freeze the funds or block your account though? 🤔

            • threepaws on 07/03/2022 - 21:48

              @WoodYouLikeSomeCash: No.

              A cold wallet is an offline blockchain wallet that can only be owned if you know the key phrase that goes to it.

              So it can't be seized like a bank account

              Funny the he says it's safe from theft but people have lost their cold wallets through theft

              • WoodYouLikeSomeCash on 09/03/2022 - 16:21

                @threepaws: No but it’s odd that he’s saying your money in CDC can’t be seized or frozen, because that’s not try since you don’t actually own the keys when the moneys in CDC lol.

  • datafellows on 04/03/2022 - 19:35
    +1

    Depends on your spending or card you get easily at least few hundred dollars worth of points that you can redeem as gift cards at the end of the year, wife's Christmas gift sorted! Lol

  • Jimothy Wongingtons on 04/03/2022 - 19:55
    +2

    28 degrees price protection for MVP

    • stirlo on 04/03/2022 - 20:35
      +1

      The original Coles Price Protection plan is also a winner.

      28 Degrees is 1 year at any Australian retailer
      Coles is 2 years at the same retailer.

      Between them you can save $100s if not $1000s if you buy tech or fashion items that depreciate rapidly and go on sale in the future.

    • USER DC on 04/03/2022 - 21:58

      Where is it available right now ??? I want it but dont see it advertised on their website anywhere

      • stirlo on 05/03/2022 - 12:57

        Both these cards only offered these policies until around 2015. Today they are only for existing customers that held the card from before they stopped offering it so sorry but there's no way to get these perks anymore.

        • USER DC on 05/03/2022 - 14:30

          even coles is not offered now ?

          • stirlo on 05/03/2022 - 15:38

            @USER DC: Correct

            • USER DC on 05/03/2022 - 16:17

              @stirlo: opps i was dreaming the current Coles No annual fee offered this same protection

              • stirlo on 05/03/2022 - 16:23

                @USER DC: It did in 2015. But not for new customers today.

                If you’re an existing cardholder and signed up before they removed it like me you have been able to keep the old policy. But for new customers you cannot get it.

                • USER DC on 05/03/2022 - 21:32

                  @stirlo: Yea i only signed up this year. :( out of luck of everything

  • SF3 on 04/03/2022 - 20:17
    +1

    Alternatively, what are the most important credit card perks for you personally?

    Online shopping.

  • bobbieb on 04/03/2022 - 20:20
    +4

    Perks and bonuses aside, even in this era of debit visa/mastercard, credit cards give you one main advantage: cashflow management.

    Assuming you have even a basic grasp of money management, credit cards mean that your actual money stays in your pocket for long.

    If you spend 50 today, you either give the money to the merchant now, or leave it sitting in your offset/savings account for upto whatever the interest free period of the card is. You're applying - at a smaller scale - one of the same techniques businesses use to manage their cashflow.

  • sassypants on 04/03/2022 - 21:09
    +1

    Used to think the same as you, OP.

    But then I realised that if I'm spending anyway, why not get rewarded for doing so?

    Amex has neat offers very regularly and other banks also from time to time.
    I've taken advantage of free travel insurance for damage to my phone that occurred when I was on holiday several years ago.
    From churning I've also amassed a large number of frequent flyer points that has allowed me to fly to the USA for little out of pocket costs (+ taxes etc..) and will be able to do so again once international travel resumes with more frequency. Have also used the points a number of times in the past to upgrade to business class.

    Some cards are also fantastic to use whilst overseas on holiday. You can use cash, but credit cards for travel can be so handy and more practical.

    I also feel safer making transactions with my credit card, knowing that if there's ever fraud on my cards then the issuing bank will take care of it. Never had it happen though. I've had cards proactively cancelled and new ones issued when the bank became aware my card had been used somewhere fraud was reported, so in a way they actively protect me (and themselves).

    Also, as mentioned above by bobbieb, it's great for just delaying the time between a purchase and when the account needs to be paid off. It's not much, but the up to 1 month of extra time that my cash sits in savings is all extra interest I get. I always set up direct debit to pay off the balance on the due date and never incur interest charges.

  • Kenb0 on 04/03/2022 - 21:23
    +1

    always seemed too troublesome to maintain one (checking its balance, making monthly repayments), and too risky in case I forgot to repay it or something

    All the credit cards I’ve had, I’ve just had it setup to auto-debit from my bank account. No chance of forgetting to repay it then

    And if instead of using a credit card, you’re using a debit card, aren’t you also checking the balance regularly as well?

  • orangetrain on 04/03/2022 - 22:25
    +1

    If you don't use a credit card at places that don't use a surcharge, you're subsidising the people that use credit cards.

    Don't like it? Only shop at places that have a surcharge or don't accept credit cards. Is it easy?

  • threepaws on 04/03/2022 - 22:44
    +1

    The rewards didn't seem significant either (bonuses for random items, 2% cashbacks).

    Oh honey

    Two recent ones come to mind. Amex had $1200 worth of points. And an ANZ one had $800 worth of GCs.

    Other ones have tens of thousands of QFF

    Look at points hack website

  • lordezekiel on 04/03/2022 - 22:44
    +1

    I have had a small capacity ($5000) credit card since i was 20 years old. It's like a security blanket, you know it's there in case you need to it. I usually pay it off extremely fast if i use it and have barely ever owed money long enough to pay any interest.
    Some people however are frankly NOT suited to have credit card/s, i know many of those people, cards maxed out constantly, always paying off the bare minimum at the last minute, basically just paying the interest and never getting the balance down.
    If you have even an inkling you would be one of these people, then do not get one.
    I personally don't care about rewards and all that faffing about, that's not the purpose of it for me. I also dont use cashback websites, i dont have flybys or club cards, loyalty cards or coffee cards stuffed into my wallet either.

  • MeesusEff on 05/03/2022 - 01:40
    +1

    Husband and i both got 28d and coles mastercards each, all with the (not available anymore) shoppers protection. It's saved us thousands, being able to buy games on release and then reselling and claiming the price difference 1/2 years later, buying things full price (yay more flybuys points) before the sale and getting it before it sells out. Also if our phone /tablets break during the cover period. Ever had the sinking feeling of 'oh man the X I just bought 2 days ago is now $40 cheaper', no more.

    Have used ANZ travel insurance that came with the black card when our bag got stolen in Prague, also claimed with 28d insurance.

    Set monthly alarms to pay off credit card, takes less than 5 minutes, easy.

    Also helps with peace of mind if cc gets compromised it's pretty easy to get your money back.

  • Neoika on 05/03/2022 - 11:15

    It is not for everyone. Just watched this Youtude video.

  • Archi on 05/03/2022 - 12:00
    +1

    how do you pay your bills?

  • DoctorCalculon on 05/03/2022 - 20:38
    +2

    too risky in case I forgot to repay it or something

    Most lamest excuse, if there is one.

    You simply setup an automatic payment each month to pay off the balance (via internet / mobile banking).

  • Daniel Plainview on 07/11/2022 - 09:21

    Troublesome???

    Like everything CC can be super simple or a PITA - its up to you. Pay the full balance off by DD every month. Enjoy the cash flow advantages, simplicity and lil side perks.

    Not sure you're looking at how beneficial they can be if used properlu - which is incredibly easy if you have any financial discipline at all.

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