What’s the Difference Between Saving and Investing?

[John Howard]

Hi, Should I save or invest my money? and How much should I save?

[Paul1Perth]

Depends how much you can afford to risk losing altogether.

If you have a mortgage your best investment is to pay that off first if you have spare cash. You should be paying into a super fund and you can get tax breaks by salary sacrificing into that. Probably a fairly safe way of investing.

After that there's shares, property, money markets, bitcoin. All a risk though and you could make a lot or lose everything.

[Jon the Hat]

Generally speaking, with savings your money is not at risk, but your returns are generally pretty low.  Banks & super funds usually are protected by government schemes to encourage people to trust them.  If you invest you have the opportunity to earn more return, but your assets are at risk - ie your share etc can drop in value, or indeed become worthless.  There are degrees of risk of course, and you can spread your investments across the ASX for example, when you are more subject to the global or national economy rather than the success or failure of individual companies.  Investing is generally a better idea in the longer term as you can ride out the ups and downs.  If you need quick access to funds when values are down, you realise your loss and that is that.  Good luck!

[Bobj]

5 hours ago, Jon the Hat said:

Generally speaking, with savings your money is not at risk, but your returns are generally pretty low.  Banks & super funds usually are protected by government schemes to encourage people to trust them.  If you invest you have the opportunity to earn more return, but your assets are at risk - ie your share etc can drop in value, or indeed become worthless.  There are degrees of risk of course, and you can spread your investments across the ASX for example, when you are more subject to the global or national economy rather than the success or failure of individual companies.  Investing is generally a better idea in the longer term as you can ride out the ups and downs.  If you need quick access to funds when values are down, you realise your loss and that is that.  Good luck!

A very good app to check out the ASX daily dealings is marketindex.com.au.

Cheers, Bobj.

 

[Whey aye]

You save up to be poor.

You invest to become wealthy.

[Paul1Perth]

3 hours ago, Whey aye said:

You save up to be poor.

You invest to become wealthy.

A friend of mine came over absolutely cashed up. He emigrated and sold his house in Windsor for the equivalent of $1.5mil. Bought a 4 bed detached place, 2 mins walk from the beach for about $650,00. Then he went on an investment spree and bought investment properties galore. Used to brag about not paying tax as they were all negatively geared. 

Along came the GFC, he lost his well paid job because of it, house prices fell, he had bought houses off a plan that needed paying for when they were finished, he had thousands outgoing and hardly anything coming in. Pretty soon they couldn't afford their own mortgage repayments and nearly lost the house.

They are now over a mill in debt and I've no idea how he even manages to pay the interest. He has 3 kids too, one still at school, one finished her degree but can't get a job and another working in the snowfields but not making enough to support herself.

His degree was in economics and they base everything on cash flow. A perfect case of how investing can go wrong and ruin your life.

[Marisawright]

22 minutes ago, Paul1Perth said:

A friend of mine .... went on an investment spree and bought investment properties galore. Used to brag about not paying tax as they were all negatively geared. 

 

This is a mistake that a lot of Australians make.  If you are "negatively geared", it means that the investment property is making a loss (i.e your mortgage and expenses cost more than your rental income).   At first glance that seems pointless, because the reason you're paying no tax on the investment is because you're losing money.  However, it reduces the tax you pay on your salary--and for someone on a good salary, that can be worth a lot.  Plus you hope the value of the property is rising.

Some people are also conned--there are several investment advisors, including an Investors' Club that was very popular for a while, which will sell you loss-making properties as a tax dodge/retirement strategy.  The con is that they find the properties for you at an inflated price, so you're losing money on the rent, but it's going to take a long time for the property to be worth more than you paid for it.   As you point out, the big difficulty is that if things go pear-shaped, you're overstretched and in big trouble.

The trick is to choose properties that are negatively geared on paper, (so you get all the tax benefits) but is actually making a profit in reality.  Not hard to do when you understand depreciation etc, but some people are just greedy. 

I'm always surprised how focussed some people are on not paying tax.  They'll go to great lengths to avoid making a capital gain so they don't have to pay capital gains tax, for instance. In the process, they lose sight of the fact that even after tax, that capital gain would've been a nice amount of money to have.

Edited April 2, 2021 by Marisawright

[newjez]

On 29/03/2021 at 07:05, John Howard said:

Hi, Should I save or invest my money? and How much should I save?

The other question is whether you should save or take on debt. There are times when it's beneficial to reduce debt, and times when it is beneficial to take on debt.

Generally, in times of high inflation, debters will be rewarded. For example, Australian property prices are rising. Anyone who takes on debt and buys a house will be rewarded, until property prices stop rising.

I guess that is a fundamental difference between savings and investment. Savings is always your money, whereas you can invest with borrowed money.

Obviously when you are leveraged the risk is substantially greater. But the rewards also can be substantially greater.

Edited April 2, 2021 by newjez

[Whey aye]

2 hours ago, Paul1Perth said:

A friend of mine came over absolutely cashed up. He emigrated and sold his house in Windsor for the equivalent of $1.5mil. Bought a 4 bed detached place, 2 mins walk from the beach for about $650,00. Then he went on an investment spree and bought investment properties galore. Used to brag about not paying tax as they were all negatively geared. 

Along came the GFC, he lost his well paid job because of it, house prices fell, he had bought houses off a plan that needed paying for when they were finished, he had thousands outgoing and hardly anything coming in. Pretty soon they couldn't afford their own mortgage repayments and nearly lost the house.

They are now over a mill in debt and I've no idea how he even manages to pay the interest. He has 3 kids too, one still at school, one finished her degree but can't get a job and another working in the snowfields but not making enough to support herself.

His degree was in economics and they base everything on cash flow. A perfect case of how investing can go wrong and ruin your life.

So you haven't got a clue about investing and neither has your mate,what do you feel you have proved .

Can you answer this.If I lose money I will go bust,if I make money and pay tax on it I will not go bust.Which will provide the better outcome?.

A slight increase to your total lack of knowledge.Use Commonwealth bank as the control ( CBA. .ASX ).

I bought them for $7 a share,not long after the float,probably a bit less than $7.Having a little bit of common sense I decided to reinvest the dividends.That original investment of $7K is now worth around $525 K.

My mate didn't buy them.During that period he died 72 times and was brought back to life 600 times .He has 23 children and they are all unemployed .He got divorced around 300 times.

 

I had a struggle,died 1600 times,brought back to life just over a million times.73 dogs died on me and 15 cats disappeared.My 400 th wife decided I was a keeper .

I wake up every day wondering which of my 400 unemployed children will kill me.Kill the old man and we will inherit a fortune,I need eyes in the back of my head to watch them all.

Neither of us are economists,can you believe that.

To further your education ( I know I'm trying the impossible,but here goes)

Across the 30 years that CBA has operated they have made a profit and paid tax on all of those profits .How could the board of directors be so stupid,how could they not work out that losing money and bragging about not paying tax would be the way to go.Perhaps they should get your mate the financially clueless economist on the board.

To further your education even more ( I know it is impossible,but God loves a trier),banks operate on  net interest margin.This is the difference between interest paid to the bank,and the interest the bank pays out to the people they borrowed the money off,savers.

Now gross assets in 1991 were approx $100 billion.They lent that money out @ 3%,say all of it on mortgages .They paid the people they borrowed that money off 1%.They collected $3 billion ,and paid out $1billion,difficult maths,perhaps a pencil and paper would help .

$3 billion collected,$1 billion paid out and $1 billion to pay wages,rent etc.That leaves $1billion in net interest margin ( commonly called gross profit),or 1% net interest margin I know interest rates change over the years,but try to keep up,and try thinking 

 

Fast forward to today,strange but the business model still works.Wages have gone up ( most people will deny that),and house prices have gone up,who could believe it.

So $1 trillion in gross assets ( lent out in mortgages to people we'll say),@3%.Income $30 billion ( greedy b#$&@&s comes the populist cry).

1% gross profit ( net interest margin) $10 billion( greedy f @#$_$#$___  comes the populist cry)

1% to pay wages,rent,computer systems etc ( you know what the populist cry is,why don't they give their workers a big pay rise greedy $&#_&+++&_.Look how much profit they make)

And of course 1% to the people that put the $ $1 trillion there,ahem,savers.

10+10+ 10  = 30( cue Ripley's,believe it or not).

Now this bit is rocket science,you and your mate the clueless economist are not going to believe it .

Over the coming 30 years I would expect wages to rise.I would expect house prices to rise,I would expect gross assets to rise.

Suppose gross assets rise to $10 trillion lent out Everything else remains the same,1% of $10 T as gross profit ( 30% tax paid on that).

1% of $10T paid out in interest ( to the savers)

1% of $10T paid out in rent etc.

 

Get your mate the clueless economist to explain to you where CBA have gone wrong over that 60 year period.Instead of aiming to increase profits every year and pay more tax.They should have been trying to lose money every year so they didn't pay any tax,and could brag about.

 

,

 

[DT55]

On 29/03/2021 at 16:05, John Howard said:

Hi, Should I save or invest my money? and How much should I save?

For general advice on this I think the Barefoot investor or Dave Ramsay’s baby steps are both good places to start

[newjez]

On 02/04/2021 at 08:42, Whey aye said:

So you haven't got a clue about investing and neither has your mate,what do you feel you have proved .

Can you answer this.If I lose money I will go bust,if I make money and pay tax on it I will not go bust.Which will provide the better outcome?.

A slight increase to your total lack of knowledge.Use Commonwealth bank as the control ( CBA. .ASX ).

I bought them for $7 a share,not long after the float,probably a bit less than $7.Having a little bit of common sense I decided to reinvest the dividends.That original investment of $7K is now worth around $525 K.

My mate didn't buy them.During that period he died 72 times and was brought back to life 600 times .He has 23 children and they are all unemployed .He got divorced around 300 times.

 

I had a struggle,died 1600 times,brought back to life just over a million times.73 dogs died on me and 15 cats disappeared.My 400 th wife decided I was a keeper .

I wake up every day wondering which of my 400 unemployed children will kill me.Kill the old man and we will inherit a fortune,I need eyes in the back of my head to watch them all.

Neither of us are economists,can you believe that.

To further your education ( I know I'm trying the impossible,but here goes)

Across the 30 years that CBA has operated they have made a profit and paid tax on all of those profits .How could the board of directors be so stupid,how could they not work out that losing money and bragging about not paying tax would be the way to go.Perhaps they should get your mate the financially clueless economist on the board.

To further your education even more ( I know it is impossible,but God loves a trier),banks operate on  net interest margin.This is the difference between interest paid to the bank,and the interest the bank pays out to the people they borrowed the money off,savers.

Now gross assets in 1991 were approx $100 billion.They lent that money out @ 3%,say all of it on mortgages .They paid the people they borrowed that money off 1%.They collected $3 billion ,and paid out $1billion,difficult maths,perhaps a pencil and paper would help .

$3 billion collected,$1 billion paid out and $1 billion to pay wages,rent etc.That leaves $1billion in net interest margin ( commonly called gross profit),or 1% net interest margin I know interest rates change over the years,but try to keep up,and try thinking 

 

Fast forward to today,strange but the business model still works.Wages have gone up ( most people will deny that),and house prices have gone up,who could believe it.

So $1 trillion in gross assets ( lent out in mortgages to people we'll say),@3%.Income $30 billion ( greedy b#$&@&s comes the populist cry).

1% gross profit ( net interest margin) $10 billion( greedy f @#$_$#$___  comes the populist cry)

1% to pay wages,rent,computer systems etc ( you know what the populist cry is,why don't they give their workers a big pay rise greedy $&#_&+++&_.Look how much profit they make)

And of course 1% to the people that put the $ $1 trillion there,ahem,savers.

10+10+ 10  = 30( cue Ripley's,believe it or not).

Now this bit is rocket science,you and your mate the clueless economist are not going to believe it .

Over the coming 30 years I would expect wages to rise.I would expect house prices to rise,I would expect gross assets to rise.

Suppose gross assets rise to $10 trillion lent out Everything else remains the same,1% of $10 T as gross profit ( 30% tax paid on that).

1% of $10T paid out in interest ( to the savers)

1% of $10T paid out in rent etc.

 

Get your mate the clueless economist to explain to you where CBA have gone wrong over that 60 year period.Instead of aiming to increase profits every year and pay more tax.They should have been trying to lose money every year so they didn't pay any tax,and could brag about.

 

,

 

That's probably a better description of a building society than a bank, and even then an oversimplification.

Although I suspect you know this, this is an interesting read.

 

https://www.google.com/url?sa=t&source=web&rct=j&url=http://bilbo.economicoutlook.net/blog/%3Fp%3D14620&ved=2ahUKEwjckajN1uHvAhVA_rsIHfeVCHgQFjALegQIGRAC&usg=AOvVaw0q4H-SpFsTDYl17Yb9ZzxQ

[Parley]

16 hours ago, DT55 said:

For general advice on this I think the Barefoot investor or Dave Ramsay’s baby steps are both good places to start

There was a good little book i read years ago called The Richest Man in Babylon. A good read or gift for young adults.

Basically the idea was you always pay yourself first before paying you bills and loans etc. Save 10% of your income every pay and put it away in a savings account and later invest in shares or index funds. Then pay off bills, loans etc and some spending money but always put away the first 10% before you do anything.

Dave Ramsey videos are good to listen to on Youtube. His main message is never use credit cards and pay off all your debt as quickly as possible.

My take is you need to do both. Save regularly (10% is a good amount) and then invest prudently as your savings grow.

If young adults do this from a young age they will be in good shape in later life.

[Marisawright]

On 29/03/2021 at 17:05, John Howard said:

Hi, Should I save or invest my money? and How much should I save?

I confess, this question confused me.  To me, "saving" is the act of putting money aside for a rainy day.    "Investing" is what you do with those savings.  You might invest it in a savings account, or in superannuation, or the stock market, or property, or gold, or...(and also, what you invest in will change over time).

I'm wondering if the OP equates "saving" with squirreling money away in a bank account, whereas "investing" means playing the stockmarket?  

@Parley, the idea of putting aside 10% of your salary first, before anything else, is very common.   It makes sense.  I don't agree about not using credit cards, though. For me the message should be, never carry debt on your credit card.

I  think it depends on the individual too.  If you're the kind of person who can't control their spending, then obviously they're not a good idea. But if you're the kind of person who can pay it off religiously every month, they have lots of benefits.  When interest rates were high, using my credit card (with 55 days' interest-free) meant I could leave my money in my savings account for longer.  The card makes it easy to track expenditure.   I also get reward points--my annual fee is $59 and each year I redeem at least $100 in cashback. Then there's travel insurance and the fact that when travelling overseas, it's hard to hire a car without one.

Edited April 4, 2021 by Marisawright

[Parley]

54 minutes ago, Marisawright said:

I  think it depends on the individual too.  If you're the kind of person who can't control their spending, then obviously they're not a good idea. But if you're the kind of person who can pay it off religiously every month, they have lots of benefits.  When interest rates were high, using my credit card (with 55 days' interest-free) meant I could leave my money in my savings account for longer.  The card makes it easy to track expenditure.   I also get reward points--my annual fee is $59 and each year I redeem at least $100 in cashback. Then there's travel insurance and the fact that when travelling overseas, it's hard to hire a car without one.

I do have a credit card (used to have 3 or 4) but really only use it for emergencies. Mainly now i try to use a debit card.

Dave Ramsey's view is it is a psychological thing. He believes if you are spending your own money you think a lot more about buying things than if you are pulling out a credit card. He wants it to hurt when you spend money I think.

I don't really follow him that much but it is amazing the people who ring into his show and have several car leases, heaps of student debt and some have massive credit cards debts of over $50K. 

[DT55]

4 hours ago, Parley said:

I do have a credit card (used to have 3 or 4) but really only use it for emergencies. Mainly now i try to use a debit card.

Dave Ramsey's view is it is a psychological thing. He believes if you are spending your own money you think a lot more about buying things than if you are pulling out a credit card. He wants it to hurt when you spend money I think.

I don't really follow him that much but it is amazing the people who ring into his show and have several car leases, heaps of student debt and some have massive credit cards debts of over $50K. 

Yeah I think Dave Ramsey (and Barefoot) like to refer to this as ‘Conscious spending’ and I think for me at least it works. When I had a credit card, even though I paid in full every month I definitely spent more which is one of the reasons I don’t have one any more.

[Marisawright]

13 hours ago, DT55 said:

Yeah I think Dave Ramsey (and Barefoot) like to refer to this as ‘Conscious spending’ and I think for me at least it works. When I had a credit card, even though I paid in full every month I definitely spent more which is one of the reasons I don’t have one any more.

Ah, I see what you mean.  However I don't feel as though the debit card system helps with that.  Because it's a card, it still doesn't feel like money.  I guess if I was sailing closer to the wind financially and couldn't be sure there was enough money in the account, it might make a difference.

I used to love the old cheque card in the 1970's. The bank gave you a card which guaranteed your cheques up to £50, so all the supermarkets and shops accepted cheques.  My cheque book had a page at the back to list your transactions, so as I used my cheques, I could keep a running total.  It made me feel very in-control of my spending, which is probably why banks stopped using the system, lol.  

[Ken]

On 04/04/2021 at 14:45, Marisawright said:

I don't agree about not using credit cards, though. For me the message should be, never carry debt on your credit card.

I  think it depends on the individual too.  If you're the kind of person who can't control their spending, then obviously they're not a good idea. But if you're the kind of person who can pay it off religiously every month, they have lots of benefits.  When interest rates were high, using my credit card (with 55 days' interest-free) meant I could leave my money in my savings account for longer.  The card makes it easy to track expenditure.   I also get reward points--my annual fee is $59 and each year I redeem at least $100 in cashback. Then there's travel insurance and the fact that when travelling overseas, it's hard to hire a car without one.

I've always been a firm believer of paying everything you can on your credit card. Why pay now what you can pay in 25 to 55 days time for the same price? Although of course it does only make a difference if you are doing something with the money in the meantime (personally I use a mortgage offset account so I'm reducing the amount of interest I'm paying for those 25 to 55 days). But you should never use a credit card for something you can't afford to pay today since if you need to borrow on one the interest rates are (in most cases) extortionate. Most credit cards will allow you to set up a direct debit for the full balance each month so you don't really need a lot of discipline to pay it off in full each month - the discipline comes from not paying more than you can afford in the first place.

[Whey aye]

The creation of wealth through investing is a very basic bit of maths,a simple compounding calculation.You will need to use leverage .

My super fund has averaged 9% compound annual growth since 1884 ( 5?).Now with those facts it takes 2 seconds to work out how to become a millionaire. 9% CAGR means you need to put $100K in and leave it there for 30 years.You have 30 years to pay back that loan ,if that is too much then $50K will be $500 K in 30 years .On top of that you will have the SGC from work going in . 

A useful chart is XJOA.This is the all ords accumulation index.This is all dividends reinvested .The figure started at 1000 ( $) on 1/1/1980.The last time I had a look it was approx 76,500.Thus if you bought the index then,and invested $10K ( approx average annual income in 1980 ) you would have $760K now.BUT ( isn't there always a but) obviously fees have been charged over the 41 year period,they compound wonderfully for the fund.I wouldn't bother working it out.You'll have somewhere between $$450K ( high fees) and $550K ( low fees .At a push $600K,but that would be doubtful .

 

$10 K then would have been equivalent to $85 ish K now,average annual income.All plans to become wealthy end there,spend $85 K in one hit tomorrow on an all ords ETF,never going to happen!!! I will  just continue with dreams ,fingers crossed ,and lottery tickets thanks.

 When the SGC hit 9% in 2000 ish a man asked me for advice,he wanted to help his son .The simple answer was I liked ANZ at the time.Buy 2000 shares in ANZ,cost $20K.He said he could afford that.Reinvest the dividends for 40 years and he will have around 16,000 shares by 2040,probably a few more.

At the moment we know what happened between 2000 and now,a bad two decades for stock markets.Below average growth .The banks had an average time.The good bit is ANZ share price needs to hit $63 by the end of 2040,then $20K becomes $1 million over that period .

I knew what would happen,people are all talk,once the hand has to go into the pocket,all plans end there .The kid isn't  going to have a million in 2040.

XJOA may be AXJOA,I'll have a look .

 

The best share on the ASX was Westfield.The family sold out of everything around 2017.A £500 ( $1000) purchase at the offering in 1960 when dear old Frank took the company public to raise money,well, $431 million ish in 2017.All dividends reinvested,and all rights issues taken up,it ran at around 26% CAGR for the full 57 year period on average .Westfield was sold to Unibail Rodamco for around $33 billion,and Westfield Australia was spun out and is now called Scented group.Perhaos it was 2018 when the takeover occured,I can't be bothered to check  

£ 500 in 1960 would probably have been somewhere around average annual income.

 

[Whey aye]

AXJOA,,it is at 77,014.Usually it is 3 or 4 days behind while they calculate  So have a look on Friday and all dividends for March should be in by then.The big ones being CBA and Wesfarmers ( WES) paid at the end of the month 

[MacGyver]

On 02/04/2021 at 15:42, Whey aye said:

So you haven't got a clue about investing and neither has your mate,what do you feel you have proved .

Can you answer this.If I lose money I will go bust,if I make money and pay tax on it I will not go bust.Which will provide the better outcome?.

A slight increase to your total lack of knowledge.Use Commonwealth bank as the control ( CBA. .ASX ).

I bought them for $7 a share,not long after the float,probably a bit less than $7.Having a little bit of common sense I decided to reinvest the dividends.That original investment of $7K is now worth around $525 K.

My mate didn't buy them.During that period he died 72 times and was brought back to life 600 times .He has 23 children and they are all unemployed .He got divorced around 300 times.

 

I had a struggle,died 1600 times,brought back to life just over a million times.73 dogs died on me and 15 cats disappeared.My 400 th wife decided I was a keeper .

I wake up every day wondering which of my 400 unemployed children will kill me.Kill the old man and we will inherit a fortune,I need eyes in the back of my head to watch them all.

Neither of us are economists,can you believe that.

To further your education ( I know I'm trying the impossible,but here goes)

Across the 30 years that CBA has operated they have made a profit and paid tax on all of those profits .How could the board of directors be so stupid,how could they not work out that losing money and bragging about not paying tax would be the way to go.Perhaps they should get your mate the financially clueless economist on the board.

To further your education even more ( I know it is impossible,but God loves a trier),banks operate on  net interest margin.This is the difference between interest paid to the bank,and the interest the bank pays out to the people they borrowed the money off,savers.

Now gross assets in 1991 were approx $100 billion.They lent that money out @ 3%,say all of it on mortgages .They paid the people they borrowed that money off 1%.They collected $3 billion ,and paid out $1billion,difficult maths,perhaps a pencil and paper would help .

$3 billion collected,$1 billion paid out and $1 billion to pay wages,rent etc.That leaves $1billion in net interest margin ( commonly called gross profit),or 1% net interest margin I know interest rates change over the years,but try to keep up,and try thinking 

 

Fast forward to today,strange but the business model still works.Wages have gone up ( most people will deny that),and house prices have gone up,who could believe it.

So $1 trillion in gross assets ( lent out in mortgages to people we'll say),@3%.Income $30 billion ( greedy b#$&@&s comes the populist cry).

1% gross profit ( net interest margin) $10 billion( greedy f @#$_$#$___  comes the populist cry)

1% to pay wages,rent,computer systems etc ( you know what the populist cry is,why don't they give their workers a big pay rise greedy $&#_&+++&_.Look how much profit they make)

And of course 1% to the people that put the $ $1 trillion there,ahem,savers.

10+10+ 10  = 30( cue Ripley's,believe it or not).

Now this bit is rocket science,you and your mate the clueless economist are not going to believe it .

Over the coming 30 years I would expect wages to rise.I would expect house prices to rise,I would expect gross assets to rise.

Suppose gross assets rise to $10 trillion lent out Everything else remains the same,1% of $10 T as gross profit ( 30% tax paid on that).

1% of $10T paid out in interest ( to the savers)

1% of $10T paid out in rent etc.

 

Get your mate the clueless economist to explain to you where CBA have gone wrong over that 60 year period.Instead of aiming to increase profits every year and pay more tax.They should have been trying to lose money every year so they didn't pay any tax,and could brag about.

 

,

 

What an unnecessarily unpleasant post. If you hold more knowledge on a subject than someone, it does not make you better than them, nor does it give you the right to talk down to them. You could have made your point without the personal insults.

[newjez]

On 04/04/2021 at 05:45, Marisawright said:

I confess, this question confused me.  To me, "saving" is the act of putting money aside for a rainy day.    "Investing" is what you do with those savings.  You might invest it in a savings account, or in superannuation, or the stock market, or property, or gold, or...(and also, what you invest in will change over time).

I'm wondering if the OP equates "saving" with squirreling money away in a bank account, whereas "investing" means playing the stockmarket?  

@Parley, the idea of putting aside 10% of your salary first, before anything else, is very common.   It makes sense.  I don't agree about not using credit cards, though. For me the message should be, never carry debt on your credit card.

I  think it depends on the individual too.  If you're the kind of person who can't control their spending, then obviously they're not a good idea. But if you're the kind of person who can pay it off religiously every month, they have lots of benefits.  When interest rates were high, using my credit card (with 55 days' interest-free) meant I could leave my money in my savings account for longer.  The card makes it easy to track expenditure.   I also get reward points--my annual fee is $59 and each year I redeem at least $100 in cashback. Then there's travel insurance and the fact that when travelling overseas, it's hard to hire a car without one.

I haven't used cash for over a year now. Many places in the UK won't take cash because of the pandemic.

I haven't paid interest on a credit card in over ten years.

[newjez]

17 hours ago, Marisawright said:

Ah, I see what you mean.  However I don't feel as though the debit card system helps with that.  Because it's a card, it still doesn't feel like money.  I guess if I was sailing closer to the wind financially and couldn't be sure there was enough money in the account, it might make a difference.

I used to love the old cheque card in the 1970's. The bank gave you a card which guaranteed your cheques up to £50, so all the supermarkets and shops accepted cheques.  My cheque book had a page at the back to list your transactions, so as I used my cheques, I could keep a running total.  It made me feel very in-control of my spending, which is probably why banks stopped using the system, lol.  

I've twice bought expensive things which never arrived and got my money back because I used a credit card. I'm not sure you get that guarantee with a debit card.

[Parley]

8 hours ago, newjez said:

I haven't used cash for over a year now. Many places in the UK won't take cash because of the pandemic.

I haven't paid interest on a credit card in over ten years.

Do you pay an annual fee ?

[newjez]

3 hours ago, Parley said:

Do you pay an annual fee ?

Nope. Some cards do have one. Usually the ones with benefits, like free travel insurance. But ours is free.

[Marisawright]

34 minutes ago, newjez said:

Nope. Some cards do have one. Usually the ones with benefits, like free travel insurance. But ours is free.

Yes, I'm pretty sure that's how it works.  Lots of choice of fee-free credit cards.

I have a Visa card with the Commonwealth Bank.   I could've opted for no annual fee, but I decided to go for the version which costs me $59 a year.  For that I get rewards points when I shop.   I always take the rewards as either cash paid to my bank account or Coles gift cards (my local supermarket where I usually shop).  That way I'm not tempted to waste the rewards on stuff I don't need.    I always get at least $100 in rewards every year and it's sometimes a lot more (e.g. if we go on holiday and I buy the tickets with my card), so I'm well ahead.  The travel insurance is also handy.