Why I buy everything with credit

I try to use my credit card for as many (necessary) purchases as possible and I’m going to tell you why but first, like all good tales, we must start at the beginning.

I got my first credit card just before I was due to start university back in 2011, 10 years – sheesh I’m getting on, because I went to the bank to upgrade my bank account to a “student account” which had benefits such as an interest-free overdraft. I was also upsold a “student credit card” with a £1,250 credit limit, more money than I knew what to do with, and I agreed to it because I was moving away from home and it would help. Right?

I don’t remember using the credit card all that much to be honest but when I did it was to buy things I couldn’t really afford so I ended up having the balance sit there for months and months as I struggled to pay off by only paying the minimum. As I mentioned my financial education is zero at this point. One purchase I do remember making on this card was tickets for my sister and I to go see Harry Potter and the Cursed Child in 2016? As that was a few hundred pounds (£), that balance took a while to clear, all the while incurring interest.

In 2015, 1 year after finishing my university degree, I got my first job then 6 months after that I decided to move out to be closer to my place of work. I needed a credit card so I could get some of the things I needed for the move. You know, a good idea, right? I started with a Google like any good research and decided to apply for Virgin Money credit card, which I still have today by the way, and I was given a credit limit of £3,000 which again for me at the time was just wow. I can get anything. When I moved out and I needed things like bedding, cutlery, a television and they all went on my credit card and I didn’t have the money to pay back immediately so they just sat on my balance and I paid the minimum payment and ate interest every month for years.

I had loaded my credit card in such a short space of time. I decided to get a new vacuum, because the one I bought on the cheap from eBay was shit, so I went to Argos because thats were my sister worked at the time. I wanted to get a Dyson v6. Turned out I didn’t have enough room on my credit card and she was like “why don’t you get an Argos card?” then I have 12 months interest free so I could just get it straight away and then pay back later. Ignorant as I was, and I think many people are, I didn’t understand that a store card such as this is actually a credit card. I believe that it should be a legal requirement for them to call this what it is “Argos credit card”, anyway I had a £700 limit on that. I feel embarrassed to admit that I recklessly and wantonly took on bad debt for a fucking vacuum but it comes down to my lack of financial education. Again, I bought things couldn’t afford.

2017, I sign up to PayPal Credit. It has credit in the fucking name and I’m pretty sure I didn’t treat it as a credit card which of course it is! This added about £1,500 to my available credit which should be a good thing because lenders are trusting me with greater sums but without the financial education to wield it, it’s matches in the hand of child.

In 2018, I’m getting better with money and I’m focusing on eliminating debt so I got a balance transfer card with 0% for 24 months so I moved the remaining balance from my Virgin Money card which was wrecking me with interest charges. I never used this card for anything other than as a tool in my debt busting campaign – to be covered in another article.

Roll on 2020. One of the reasons, I decided that I needed a card again, beyond building a clean credit history, was that we were moving house and I knew would have to make quite a few big purchases which we could benefit from considering the rewards that come with having a card of a certain variety.

Towards the end of last year was approved for an AMEX gold card which was quite the achievement for me. Growing up having an AMEX is considered a prestigious thing. Recently watching the fresh Prince, Carlton or Hilary mentioned Uncle Phil’s “gold card” and I was just like “damn, I have one now”, I’ve made it, but I’m no where near their level of wealth. In reality, the barrier to entry is probably considerably lower to get more customers – who knows.

When it came around to buying furniture and bits for the house, such as the sofas that came to around £2,000, I put it on the credit card. It is a huge expense but it gives me the benefits of points and we didn’t purchase anything we didn’t have the money currently to pay off in that month. A month not necessarily being a calendar month but a pay cycle, payday to payday.

At this point, you’re probably thinking, Why?

I have AMEX gold card which gives me points, so for every pound (£) I spend I get a point so I feel like every purchase I make is a little bit more stomach-able, if that’s a word, because I’m getting something else in addition. My £1 goes a little bit further – it’s doing more work for me rather than having to spent a pound (£) and it’s gone. Recently, I learned where the money for points cards comes from and you’re not going to like the answer. It’s already built into the price of items so if you’re not spending on a credit card that gives you rewards of some kind, you’re essentially paying for my rewards so thanks.

There’s also the insurance and security side of having and spending with a credit card. It’s not my money, so for some purchases if it’s stolen et cetera, the credit card can reimburse you some, if not all, of the money up to a certain point. It’s the same with refunds as well, if you’re ever in trouble getting a refund from a company, they can step in and help you get a refund.

My favourite reason for buying everything with credit, is having liquidity with your finances and because I have more money in my account over the course of the month. As I’ll spend on my credit card, I have my actual money in my accounts which I can then apply credit hacking principles to and earn interest on that money. This way that money is working for me during that period of time before I have to pay off the balance of the credit card. By then I’ll be paid again and the cycle will begin and I’ll have more money on the books and earn more interest.

Good luck finding an easy access account that will give you an interest about the rate of inflation (~2%) in this economy.

The final reason why I buy with credit is because it’s what rich people do! Why are you doing what the average person does and copying your neighbour and loser cousin?! Emulate those who you aspire to be like. Some people complain about rich people, often in reaction to “net worth” reports, and not being able to afford xyz, but maybe try copying the principles that rich people apply to their finances and apply them to yours. Even if you consider yourself “poor”, which I do, act “rich”.

Clearly, it’s not very simple, there are some caveats with this. I think this is a very high-level money technique, using credit to your advantage so it’s important that you become comfortable with it. You develop the stomach to handle it and you keep track of your spending and only spend money you have.

If anyone wants more of a guide on how I keep track of spending, let me know and I’ll see what I can do.

Looking forward there are crypto reward credit cards being released in America, I’ve not since any UK offerings yet. Instead of traditional rewards such as points, cash back or airline miles, you’re rewarded in Bitcoin or other cryptocurrencies. This is a super interesting idea to me because cryptocurrencies are still in their collective infancy – this is an asset class poised for massive growth beyond the gains we see today. These types of reward cards have the real possibility of us earning 3% on our purchases today, only for that 3% to be worth more than entire purchase in a few short years.