Using Credit Cards: When Is It Okay?

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Whilst it is true that credit card and high interest rates have made a huge contribution to the financial difficulties of many people, using a credit card is not always a bad thing.

If credit cards are used and managed correctly they can actually reap benefits for shoppers.

Primarily to get the most out of a credit card it is important that you do your research of banks and credit card providers to get the best terms to suit your requirements.

Using websites such as moneysupermarket.com can save you the leg work and time visiting or telephoning the companies individually.

If you are making a large purchase, such as goods for your home or a family vacation, you may want to spread the payments. In this instance, look for a credit card that offers a 0% interest rate.

These are usually for a fixed short term and you need to ensure that either you can pay the full amount off before the end of the term, or that once the 0% rate comes to an end, the new interest rate is still fairly low.

It is not just interest rates that cost you money with your credit card. If, like many holiday makers, you are thinking of using your credit card abroad this year, it will save you the security concerns of carrying currency.

However you need to find out if your card charges for use abroad. Don’t get caught out by this and find a credit card that will offer you a good deal.

These purchases might be one off or occasional use of your card, but a shrewd customer can save money and get rewards and bonuses on your everyday spending as well.

There is one important aspect to this though; you must pay your balance in full each month.

Get paid by the credit card company! Yes it is possible! Some cards offer cashback on purchases so use your card for all your shopping needs, earn cash back and pay the balance in full at the end of the month.

It is possible to earn air-miles, money off grocery shopping, free gifts and rewards. Some of these are introductory offers to tempt you in, so keep an eye on changes to terms and conditions.

Regular spending on these types of cards will increase the rewards, but to really make them pay to your advantage you must, again, pay the balance in full monthly.

Owning credit cards and paying them off regularly will also have a positive affect on your credit rating, which will help you if you want to apply for another card, perhaps to get another special deal, or any other form of borrowing.

As you can see, there are occasions when spending on a credit card has some very positive benefits. However, credit cards are often compared to fire – very useful when handled correctly but dangerous in the wrong hands.

To get the most out of your credit cards you must make an informed choice on which card will result in the best deal for you. Keep monitoring it and track changes to your terms to ensure you continue to get the best deal.

Post by Moneysupermarket.

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  • 8 comments

    Comments

    1. I have one credit card that I use for everything. It gives me great gas rebates. I pay it in full every month so it doesn’t cost me any more than cash to use (it actually makes me money with the gas rebates). If you pay the card off in full each month I see nothing wrong with using credit cards responsibly.

    2. I use credit card always, except utility bills, which requires $1 charge for paying with credit card. I love the reward on a credit card.

      But at the same time I payoff in full every month.

    3. It’s okay to use your credit card when you have the cash in the bank to pay it off at the end of the month. That’s the bottom line for me.

    4. I agree with retirebyforty. Credit cards are great tools for rewards and savings, but only if you can pay them off at the end of the month. I make sure that I never spend more on my card than I could pay monthly. The reason credit cards have such a negative connotation is because people are not spending within their means and fail to read the fine print. If you can avoid paying interest, a credit card is great.

    5. Credit cards are great tools. I think the problem ends up being when some people don’t have enough funds to pay it off in full.

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