Most people understand that splurging on credit cards is a bad thing, but there are a lot of pluses to owning a credit card and using it responsibly. In fact, if you can control your spending, it is wise to have at least one credit card in your purse – and here’s why.
Buy Now, Pay Later
There is a lot to be said for only buying what you need and not sticking purchases on credit. But, for big-ticket purchases, you may not have the money available at the time you need it. Say, for example, your cars exhaust falls off but pay day is a week away.
Fear not! Your trusty credit card can pay for the fix and if you pay the balance before the statement date, you could enjoy up to 56 days interest-free credit.
Spread the Cost
Need a new washing machine but your savings account is at rock bottom? Credit cards are a useful way of spreading the cost of a large purchase. Apply for a credit card with an introductory interest-free period, you can spread the cost of the washing machine over several months and it won’t cost you extra.
Section 75 of the Consumer Credit Act gives you extra protection if you pay using a credit card. If the goods or services cost more than £100, you’re covered. You don’t need to pay the full amount on your credit card – use your card to pay a deposit and settle the balance with cash if you prefer. It’s like a free insurance policy, so if things go wrong, you can claim a full refund direct from the credit card company.
Earn points, air miles, and other rewards for spending money. Different schemes offer different rewards, however, so check out the latest credit card offers before you apply for a new card.
Debit cards offer little fraud protection. If a fraudster uses your debit card details to go on an online spending spree, the money will leave your account instantly and you could end up in serious difficulties until the matter is resolved. Fraudulent transactions made via a credit card are easier to handle, as the money doesn’t leave a big hole in your bank account. So long as you notify the credit card company immediately, all transactions will be cancelled and you won’t be out of pocket while the company investigates the fraud.
Boost Your Credit
Got bad credit? Use a credit card responsibly and rebuild your damaged credit rating. Credit cards are also useful if you don’t have a credit rating, either because you have lived abroad or you are young.
For obvious reasons, if you spend, spend, spend, but only ever make the minimum repayments each month, a credit card is expensive. But, if you travel abroad, using a credit card as opposed to a debit card, could save you money, as exchange rates are better.
If you can pay off the balance each month, using a credit card to make purchases is always a smart choice.