- Buy goods now, pay later - If you pay off the full balance at the end of the month then you've earned 'free' money for anywhere up to 2 months depending on your grace period and when the purchase was made.
- If you want to buy something expensive like a new sofa or double bed then it's often a good strategy to time your purchases so you get the maximum amount of grace between when you purchase it and when you have to settle the bill with the credit card company
- This strategy also works beautifully if you put your purchases on one credit card and then move the debit balance to another Card that offers a 0% interest on balances for x number of months (usually between 6-12 months)
- Incentives - Many credit cards offer loyalty schemes, point reward systems, air miles etc. If you use your credit card a lot and always pay off the balance then with the right reward scheme you can often generate excellent savings off future purchases or air flights etc.
- No cash needed - You don't have to really carry around a lot of cash if you have some plastic in your wallet
- Cash not allowed - Many purchases these days such as Car rentals or Hotel bookings won't actually accept your business unless you have a card of some sort. You can of course always settle your bill in cash but the credit card is needed as a deposit.
- Free Insurance - Often when you buy an airline ticket or a holiday using your credit card you'll get free travel insurance. Always check what's on offer with your individual Card.
- Purchase Protection - Buy some faulty goods with your credit card and they'll normally be 100% insured for a month or two. Insurance also in many cases covers loss, so if you buy a new watch and lose it on the way home the insurance will cover it.
- Loss Protection - If you go out shopping with £500 in your pocket, ready to buy some new clothes and you lose the money on the way to the shops then bad luck. But if you have just a few pounds in your wallet along with a credit card then it's no real problem. Phone the credit card company, cancel the card and you'll get a new one in the post normally within a week.
- It depends from issuer to issuer but if the card is used before you report it stolen your liability is either zero or a token amount. If however the card number has been stolen but the actual card is still in your possession then most issuers state that your liability is zero.
Travel Advantages
If you decide to go to Spain for a holiday and want to change £500 into Euros you'll likely get a very bad exchange rate along with all sorts of commissions at your local bank. But take your credit card on holiday and the rate will be a lot better. And these days most countries especially all the hotels in the major cities and tourist resorts accept all major credit cards.
When on holiday a Credit Card normally wins hands down against a Debit Card because of the better protection safeguards. Whichever card you use it is always wise to keep every receipt and check them diligently against your card statement when you get back home. But these days with the advent of the internet many credit card companies offer you the ability to manage your account online.
Build or Rebuild Your Credit Rating
- Having a good credit history can only be a good thing
- And you can use a credit card to improve your Credit Rating, even if yours is very bad
- To do this apply for a credit card, make sure you use it and then make sure you ALWAYS pay off the full balance on time
- If you do this over a few years then your rating with the credit agencies will soar. This is because you are seen as a borrower who always repays on time
