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How to use a Credit Card to Your Advantage

I was interested to read that there are currently over 62 million credit cards issued in the UK currently. It used to be that there was some stigma about owning a credit card – they were associated with irresponsible people who had out of control debts. Now, I feel like it is more irresponsible to not have a credit card. Here are some reasons why:

You can take advantage of interest free periods

Many credit cards have an initial period of zero interest, which is helpful when you are looking to spread the cost of a large purchase. In fact, I highly advocate for never spending a penny on credit card interest by making sure your bill is paid and your balance is cleared before any interest is due. If you find yourself in a situation where you need to pay off credit debt, click here to read some tips.

You can make use of the enhanced protection that a credit card purchase gives you

You are probably aware of the enhanced protection that you get via spending on a credit card vs a debit card – or worst of all, using cash. Let’s say you buy a TV that turns out to be faulty. The first port of call would be to ask from help from the retailer or the manufacturer. But sometimes help from them is not forthcoming – in which case, in most instances your credit card company will refund you. They are also very helpful in cases of fraud.

The best cards help you accrue reward points or cashback

The best credit cards actually help you earn things – such as hotel points and points that can be spent at retailers. Some cards even earn you cashback. I try and put each and every single one of my purchases onto my credit card to make the most of the rewards out there. It’s also a good idea to regularly review the credit cards that are on the market to make sure you have the correct one for you that earns you the best benefits relevant to your interests and lifestyle.

Credit cards are almost essential to earning a good credit score

This is possibly the most important reason to own – and most importantly, use – a credit card. Most likely there will come a time when you will need to apply for finance for something such as a house or a car. If your credit score isn’t high enough, the lender may turn you down all together. If you’re lucky, they may lend to you, but at a much higher interest rate than you would have secured if you had a good credit score. It’s really easy to use your credit card to boost your credit score, just make sure you follow the below golden rules:
  • Use your credit card – just owning a credit card won’t impact your credit score, actually if you take out a credit card and not use it, it may negatively impact your score. You actually have to regularly spend on it.
  • Never miss a payment – even just one missed payment will significantly negatively impact your credit score. This is why I always make sure I have a direct debit set up to make sure I never accidentally forget to pay a bill.
  • Be consistent – it may take a few months for being a angelic credit card user (i.e. one who spends on their credit card and pays it off) to show up on your credit score, but be patient and consistent and you will soon see the benefits.
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