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Comment by mikeash | Hacker News Reader

The investment accounts are really just a bonus, but it's really useful to have the checking account and all credit cards visible in one place. The checking account is where money comes in, and the credit cards are where money goes out, so seeing them together makes things much clearer. I also use multiple credit cards for purchases, so I can't easily see all of my purchase activity in one place otherwise.

Additionally, having everything consolidated means I can do a quick check on recent transactions several times a week, instead of just looking at things when a bill comes. That means that it's much easier to detect fraud, since the activity is fresh in my mind, and takes much less time to notify the institution of the fraudulent transaction.

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OK, I guess I'm a completely different use case. Why multiple credit cards for purchases? Why don't you buy things using a debit card?

In addition to what mikeash said, using a credit card and paying it in full improves your credit score whereas a debit card doesn't, which will make it easier to get loans later.

That's (thankfully) not true in the UK (or, indeed, most countries).

Is there no such thing as a credit score in the UK? Or does paying credit cards not improve your credit score?

The banking industry in the US is messed up, but how does it not make sense that responsibly paying loans doesn't indicate you are more likely to make good on future loans?

There's no such thing as a credit score (at least not in the US sense).

The big problem with the US system is that it gets you needlessly hooked on the whole idea of credit. As per this very example, you need to do things like get credit cards just to pay them off on time, or else you're screwed when it comes to things like getting a mortgage. In most of Europe the key factor for that sort of loan is simply whether you have a steady income that's high enough to make the payments, factoring in outstanding debts. A credit check will show up things like whether you've a history of missing payments on any existing credit, and that can certainly be taken into account, and most lenders have their own version of a 'credit score' they'll apply based on all that info — but it's not a centralised thing, and it's generally more concerned with raising past problems as a red flag, rather than with past good behaviour.

If you've a history of living within your means that should be a good thing, not a bad thing.

> If you've a history of living within your means that should be a good thing, not a bad thing.

How is always paying off a credit card not living within your means though?

Maybe this is some US-centric brainwashing, but it seems to me that someone who has never had a credit card is less trustworthy than someone who had it and didn't overspend; it proves that the person had the opportunity to do something really dumb and didn't. The person who never had the credit card might have done something dumb if they were ever given the chance.

It's interesting that your credit checks are so decentralized, but it seems unlikely to me that would cause them to consider no history to be the same as known good history.

That said, I'm not even sure how much impact properly paying credit cards has versus not having one, but even with a minor difference there is practically no advantages to using a debit card instead of a credit card that you always pay off in full from your checking account. Even excluding credit, certainly you must get additional fraud guarantees and possibly rewards programs with credit cards in the UK?

But if you're always living within your means, why would you ever want to have a credit card at all? Things like reward programs certainly aren't universal (or even common, I believe, though they do exist), and pretty clearly only exist to try to get people to use the card in the first place, on the basis that it's to the credit card company's advantage, in that enough people won't pay off in time to justify the rewards. (I should also note that it's more common in UK/EU for credit cards to also have a monthly or annual fee.)

I'm not sure what additional fraud guarantees exist. I had fraud on my debit card once, and it was resolved much easier and quicker than the time I had fraud on my credit card. The UK does have a slightly odd additional consumer protection law in that if you buy anything over £100 on a credit card, and the goods turn out to be faulty, you can claim the cost back from the credit card company, rather than the retailer. That's certainly vaguely useful, but I've never heard of anyone choosing to have a credit card just for that reason.

I think there's potentially a different worldview at play in the "had a chance to do something dumb and't didn't" approach. To massively overgeneralise, I'd say the European way is to simply not put that temptation in front of people, whereas the US way is to deliberately encourage it, so as to massively profit from it (with the UK constantly torn between the two!) :)

So I'd say pretty much the opposite of your final conclusion: There are so few advantages to using a credit card rather than a debit card that why would you bother with the hassle/risk?

If nothing else, a credit card gives you a month-long interest-free loan when used properly. That's money in your pocket if you keep the difference in an interest-bearing account. Why wouldn't you take advantage of this?

I'm not sure what hassle/risk you're talking about with a credit card. The hassle factor is the same (approximately none) and the risk is lower, not higher.

People always say this "interest-free loan" thing, but it doesn't make a lot of sense to me. In an average month I spend under €1000 a month on my debit card, but let's round it up to that just for an example. My bank doesn't pay interest on current account balances. Even if I were to go through the hassle of setting up a term deposit for that, the total interest I'd receive on that in one month is 78 cents.

I can think of any number of reasons why I wouldn't bother taking advantage of that.

The question as to whether a credit card is more/less/even risk to a debit card is pretty much the issue at hand here, but even leaving aside the slightly odd issue of psychological risks and hassles, I've heard plenty of horror stories from people in the US where something went wrong to make their monthly payment late (including the credit card company just deciding to change the due date), thus triggering all sorts of badness.

Well, get a better checking account to start with!

Yeah, the money is small, but it's also free. I mean, $10-20/year for doing nothing? Why not?

So as you say, it comes down to the risk differential. If you believe a debit card is less risk, then certainly a tiny amount of interest won't change your mind.

For what it's worth, I've heard far more horror stories about debit cards than credit cards. The major difference is that with a debit card, any company that gets your card info can screw you over. You place an order online, and the company charges you $1000 instead of $10 by mistake, leaving no money in your account. Your next transaction then overdrafts, leaving you with a fat fee. In theory, it's not your fault and you should be able to get the bank or the merchant to cover it, but they'll all be pointing fingers elsewhere....

And of course, if you can't get the money refunded immediately then you spend a great deal of time with no money in your account. Now you may have trouble buying necessities etc. until the situation is fixed.

Additionally, I have my credit cards set up to automatically pay off the full balance each month. If somebody tries to pull a dirty trick and the payment is made late, the blame is clearly and fully with them, so I imagine that would be quickly resolved. Beyond that, there really isn't anything to go wrong other than a major failure of self-control.

Where does one find these magical accounts? In many countries no bank pays interest on current accounts, or, where they do, currently interest rates generally are so low anyway that the amounts are negligible. I have much better ways of arranging my finances than faffing around with credit cards I don't need and moving money around short term money market accounts just to earn less than $20 extra a year.

As for your example of buying something online with a debit card, I don't do that. My bank lets me generate as many virtual cards as I like for online shopping, each with a different number. I set the maximum amount that can be charged to each one and I can then order anything I want online with it with none of the risks you mention.

Even if I couldn't do that, the situation you describe wouldn't arise, as

a) I have daily limits on various types of transfers and withdrawals (that I can adjust online if I need to spend more than that at any time, so I keep the defaults pretty low). So even if someone was being malicious they still couldn't take out more than that amount (and I've SMS notifications set up for all transfers over a fairly low limit too, so they couldn't just come back and take another payment every day until I was cleaned out). It would certainly inconvenience me, but that's just as true with a credit card (and that would probably take me longer to notice). And, as I said earlier, I've had experience of problems with both, and the credit card ones were much more hassle to resolve.

b) my current account is multi-currency, so even if someone managed to clean out all my euros, I'd still have cash in GBP, USD, etc.

c) most of my money isn't in my current account anyway, so even if that got completely cleaned out, in all currencies, I'd still have money in my various other accounts.

Interest bearing checking accounts do exist. They're not making much right now, but it's more than zero.

I don't get why you describe credit cards as "faffing around". They're no more hassle than debit cards.

Are you saying the UK doesn't have a credit score system or that it's not used in the same way as it is in the US? Because I'm constantly getting emails from Experian asking me to do a free credit check, etc. etc.

There is no central credit score — each lender (or credit agency) creates its own sets of rules as to whether you're good or bad, all with different criteria. Some of those may package it up as a "score", but that's essentially meaningless. Checking that your credit reports from the major agencies (Experian and Equifax are used by about 90% of lenders IIRC) are accurate is worth doing from time to time, especially if they're offering it for free (although as the maximum they're allowed to charge, by law, is £2, be careful that the "free" version isn't a way of sucking you in to something else)

http://www.moneysavingexpert.com/loans/credit-rating-credit-... sets it out quite well.

Credit cards provide several advantages over debit cards. In the case of fraud or simple mistakes, money isn't directly removed from your account. You also effectively get a ~30 day revolving interest-free loan if you pay the card in full every month. You can make unusually large purchases without waiting for money to transfer around, since the card can be paid off later.

As for multiple cards, some of it is playing games with different rewards programs (card X gives more points for groceries, but card Y is better for gas, etc.) and some of it is that not every place takes American Express, which is generally my preferred card.

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