Credit cards can be really useful tools for building your credit rating – if they’re used properly. Think about it, lenders need to know that you have a good track record of paying back money you’ve borrowed, on time. It can be a good idea to put something on your credit card each month – say your weekly shop or a tank full of petrol – and pay it off in full at the end of the month.
Dream holiday turned into a nightmare when the company you booked it through went bust? If you paid either a deposit for the trip or the full sum on your credit card you might be covered under Section 75 of the Consumer Credit Act 1974, meaning you may be able to make a claim against your credit card issuer.
You’re offered the same protection under Section 75 when you use your credit card to purchase items costing over £100 and no more than £30,000. Your credit card issuer has the same liability as the merchant you bought the item off if something goes wrong, e.g. your goods aren’t supplied or aren’t up to scratch. This extra layer of legal protection means it can be worthwhile using your credit card for major purchases, like a new sofa or TV. Even without the added protection, credit cards can help you spread the cost of major purchases over a few months – making them easier to budget for.
The better exchange rate you get when changing your holiday money, the more cash you have to splash while you’re away. Sometimes credit cards offer a better rate than exchanging cash in advance, plus you don’t have to try and guess how much you’ll spend. If you travel abroad regularly it’s worth looking for a credit card which doesn’t have any overseas usage fees.
You may make repaying debt you owe on your existing credit cards more manageable by consolidating the debt and transferring the balance to a card with a lower rate of interest – or ideally a 0% interest card. Please keep in mind balance transfer fees may be payable.
Flights back from Spain delayed and you’re all out of Euros? Car need a pricey part replacing ASAP? Washing machine on the blink and you’ve no clean clothes for work on Monday? Credit cards can be a life saver if you need to pay for something unexpected. If you’re able to pay off the full balance when you get your bill you won’t even pay any interest. Or you can ease the pain of an unexpected yet necessary purchase by spreading the cost out over a few months.