What are the benefits of a credit card?

A credit card is a convenient and flexible way of borrowing money, which lets you make purchases that you can pay for in the future.

Before you take out a credit card, it’s important to be aware of the potential costs and ensure that you only borrow what you can afford to pay back. To get the most out of your credit card it’s important you’re able to meet your payment dates and ideally pay in full every month.

If you’re unsure about whether or not credit cards are for you, we’ve put together a few of the benefits you can expect:

If you pay off your balance in full every month, you’ll have up to 30 days interest-free. This means you won’t pay any interest on what you spend for around 30 days.

Some credit cards also come with an interest free purchase offer. This means that by paying at least your minimum payments every month, you could enjoy an extended interest free period on purchases you make. You could reduce your balance quicker if you pay more than the minimum payment each month. To keep your interest-free rates, you’ll need to stay within your credit limit and pay at least the minimum amount on time, or your interest-free rates will go up to your purchase rate. Once your interest-free offer ends, you’ll pay your purchase rate on any remaining balances, as well as on anything new you buy.

If you’re unsure, simply refer to either your Terms and Conditions or the reverse of your statement for further details on the fees charged. For more information, have a look at our section on understanding credit card fees.

By paying your credit card balance off in full and on time each month, you could help build a positive credit history. It’s important to do this as lenders will look at your credit history to help them decide whether to lend to you or not. As well as helping you get access to credit, having a good credit history could also help you get a better deal on things like your mobile phone contract. But it’s important to remember that if you don’t manage your card well it will damage your credit history, which could lead to problems when applying for credit in the future. For more information on your credit history, have a look at our section on credit history.

Every transaction you’ve made is shown on your statements so it’s easy to monitor how much you’re spending every month. This can be a helpful budgeting tool, plus many credit card companies also have online servicing where you can view your last transactions in detail.

It’s always best to try and pay off your balance in full every month, however Interest free or 0% balance transfer cards could be good when you have a credit card with a balance on it, as they allow you to transfer this balance on to your new card and you could get a breather from paying interest on that balance over a set period of time – just as long as you make your minimum payment on time each month. Even with a transfer fee to pay, it may work out cheaper over the course of the interest-free period. Just remember – this doesn’t mean your minimum payment will be lower each month, it just means it’ll take less time to pay it off, and also, if you only make the minimum payment each month, you may not pay off your balance before the end of the interest free period.

To keep your interest-free rates, you’ll need to stay within your credit limit and pay at least the minimum amount on time, or your interest-free rates will go up to your purchase rate. Once your interest-free offer ends, you’ll pay your purchase rate on any remaining balances, as well as on anything new you buy.

Having a credit card could help cushion the cost of life’s ups and downs as it can sometimes be more convenient to use a credit card than take out a loan.

A few things to remember

Although credit cards can come with all of the above benefits, it’s important to also consider the following:

  • How much can you afford to borrow? Think about whether you can really afford a credit card before you apply
  • You could be charged fees if you make late payments or miss them, which will harm your credit rating and could impact your ability to get credit in the future
  • Occasionally you may make a big transaction that takes you over your credit limit, if you do this you will be charged an over limit fee. You can use our mobile app or mybarclaycard online account servicing to keep track of what you’re spending.

For more information have a look at our page on how to choose the right credit card for you  and understanding credit card costs.