Using a credit card can be great for a variety of reasons. I worked really hard to get debt free, but would you be surprised to know that I still have 3 credit cards in my purse that I use regularly? They provide a whole host of benefits showing you that using credit cards in some situations is a good idea. If you are looking for a credit card to suit your needs then TSB have a great range to choose from.
Section 75 is a brilliant bit of legislation that means your credit card provider must take responsibility if something goes wrong with your purchase. Simply pay for something that costs between £100 and £30,000 on your credit card and you will have extra back up should something go wrong.
Improving your credit rating
Someone who hasn't had any line of credit may find it difficult to obtain important credit like a mortgage. This is because the lenders have no way of judging how well you can manage credit given to you. If you are looking to improve your credit rating then making regular purchases on a credit card and paying them back monthly. This can be your fuel, groceries or anything. Just remember to keep up with the payments so that you aren't charged interest.
A balance transfer is where you take the balance on a high interest credit card and move it over to another credit card with a lower interest rate. This can save you a ton of money on interest, even taking into account the balance transfer fee. It is important to remember not to build up a balance on your now empty card and end up owing more money than you originally borrowed.
Building up an emergency fund is a great idea, but sometimes life happens and you need to get access to cash fast. Credit cards are a great way of doing this as the money is available instantly to spend.
Great for travel
When you travel abroad you often need to hand over your credit card for car rental or hotel stays – this is so that these companies can take the details and then if there are any additional charges they can be charged to you. I usually travel with a pre-paid currency card so handing that over means having hundreds of pounds inaccessible, whereas using a credit card leaves me to enjoy the pre-paid currency I have loaded. It also helps with any travel emergencies that come up, such as having to pay for medical care before your insurance pay it back to you.
If you see a fantastic offer on something you were going to buy after pay day, then a credit card is great in this instance as you can get up to 56 days interest free (depending on when in your statement cycle you make the purchase). You have to be very careful not to overspend and only buy what you would have bought anyway – and be sure to pay it off so you aren't paying interest, therefore negating the saving you made.
Do you use a credit card for regular purchases? What about the big ones? Which benefits do you make use of?
This is a collaborative post.