Benefits of Using Credit Cards.
Much has been written about the dangers of misusing credit cards, and it is true that many people have run into serious problems because of the careless use of credit. Used properly, though, credit cards can be a source of many benefits, and can provide certain protections and warranties not available when paying by cash, cheque or debit card.
This article will point out the types of benefits available, but not name any specific card, because the features and advantages of each card are liable to change. There are several good comparison websites which will give you up-to-date information about the different cards available; it will be to your advantage to make use of them.
There are always cards offering bonuses, or “freebies”, as soon as your spending on the card reaches a target amount, either on a one-off or a recurring basis. The offers vary, so choose one which fits in with your ...view middle of the document...
Using the right credit card can also give you an advantage when you spend abroad. By carefully choosing the card you use, you could sometimes be up to 6% better off than if you had used another card or bureau de change. Paying the balance in full is, again, vital if you are to maintain your savings. The offers from individual cards and companies vary widely, so don’t forget to monitor the many sites available to help you compare the various choices.
Another way to benefit from buying with a credit card is protection against the retailer going into liquidation. If your purchase is over £100, under the provision of the law, your lender is jointly liable with the retailer. If the company does cease trading, you have exactly the same consumer rights with the card company as you do with the retailer to get compensation or your money back. This applies if you only pay a deposit on the credit card, even if this deposit is less than £100. It is the value of the item that the card company is jointly liable for. It can’t be stressed too often that you must pay the balance in full to avoid interest charges.
As you investigate and find cards that suit you, you may be tempted to apply for all the cards you have found. Yet it is important that you consider the possible impact on your credit score. Every time you apply for credit, the application has an effect on your credit score – and, of course, your ability to obtain further credit. If your credit history is good, there is no need to be too cautious, but if it is not, be wary and make sure that the incentive on offer is worth the risk. Bear in mind that, with credit applications, the overall number matters less than the frequency. If you want multiple cards for different purposes, after you first couple of applications apply for extra cards every few months.
Another mistake you could make by holding multiple cards is to have high, unused, available credit. Perhaps counter-intuitively, this can diminish your credit score. So, if you are not going to use a card any more make sure you cancel it with the card company, don’t simply cut it up.