My general view on debt is that is it is that is mainly useful when acquiring an asset that will give you some tangible returns. For example, if a business wants a loan to buy some machinery that would allow them produce their widgets more efficiently, then that is a good reason to borrow. On the other hand, if a person runs up huge debts buying clothes, then clearly that’s not so good.
So when it comes to debt, and credit cards in particular, I think we need to be very careful. There is a tendency for some people to think that credit cards are free money; they don’t realise the pain of paying it back until it’s far too late.
Of course credit cards are not just about debt. They can be useful in protecting you against dodgy traders or companies going bust and if you pay them off in full every month, you can even profit from them if they offer cashback.
I got my first ever credit card around the year 2000 when I was 18, and it was an Egg card. The reason I chose that card was that they allowed you to manage your account on-line, charged lower fees, and offered a good rate of cashback. However, over the years since they have steadily upped their fees and reduced the cashback, so much so that its benefit now is almost negligible.
Capital One World Mastercard
Last year, Brendan (the king of credit cards) alerted me to a much better cashback card. It’s called the Capital One World Mastercard, and it’s essentially a cashback card that will pay you 1% of whatever you spend on it. If you shop sensibly, this means a further 1% discount on everything you buy, and because it’s a Mastercard it will be accepted pretty much everywhere.
However, the main reason I decided to write about them today is that I just tried out their new online banking system and it is probably the best I have ever used. I say this because it allows you to download your statements in a number of formats such as QIF (Quicken / MS Money), CSV, Tab Delimited etc and for every transaction it provides detailed information including even the MCC / SIC (standard industry classification) code. It also gives you the Merchant’s town and postcode.
All I need now is a good accounts package to import these transactions into!