A credit card is more than just a way to borrow money. It could also help you budget through prioritising what you pay for immediately and what you repay over a longer, ideally interest-free period. Credit cards can also come in handy when you have unexpected bills, such as a broken boiler, or if you need to buy something last-minute such as a birthday gift. Credit cards usually come with interest rates, charges and are subject to application and status, so you’ll want to bear these in mind when deciding how to use one.
In this article, we'll cover some of the things you can use your credit card for, as well as the potential benefits of sometimes using your card instead of cash or debit.
You could make payments using a credit card rather than cash so you can benefit from the financial safeguarding that comes from the Consumer Credit Act. This could offer you protection on payments between £100 and £30,000, so if a product is faulty, work isn't completed, or a supplier goes bust, you may be covered.
Many supermarkets offer reward-based credit cards. If you spend enough and pay off the balance every month, you could earn something every time you make a transaction.
When you pay off your credit balance in full every month, the interest rate becomes less important, meaning you should shop around to find a supermarket card that rewards spending. It’s important you repay the full balance each month and on time, otherwise you might have to pay interest and charges.
Cashback is another reward commonly offered with credit cards. For instance, if your card pays 1% cashback, you could earn £50 on an annual spend of £5,000. Another bonus offered by some cards is airline miles. As you spend, you earn points that can be converted into flights (excluding taxes and other charges). Credit cards with airline points are best suited to people who can repay in full each month, or else the interest charged could outweigh the benefits of the rewards.
Barclaycard has a range of credit cards with different rewards and interest rates that suit a variety of situations.
If you always pay off your balance on time and in full every month, the good news is you won’t pay any interest. You can take advantage of this and use your credit card for everyday purchases.
It’s important not to get carried away though. If you’re using your credit card every day, only borrow what you can afford to pay back. Otherwise, you could end up paying hefty interest charges and late fees. If you can make more than the minimum payment each month, you’ll not only pay off what you owe faster, but you’ll save on interest too. Our Repayment Calculator will show you the difference a few pounds extra a month can make.
Many credit cards are contactless, which can make shopping quicker and easier, as long as you repay in full and on time to avoid interest and potential charges. It means you can just touch your credit card on the reader when your bill is £30 or less.
As with a debit card, paying with a credit card means you can track all your spending and payments. With all your transactions in one place, you can keep an eye on your finances more easily. A benefit credit cards have over cash and debit cards is that you could have up to 56 days to pay back what you spend, instead of it coming out of your pocket right away. This makes budgeting easier and lets you prioritise certain expenses over others.
Just remember that after a month, any money you’ve not repaid will start to collect interest that’ll need paying, unless you have a promotional offer. You can sign up online and mobile credit card apps to help you manage your money on the move. For more tips, check out our guide on how to manage credit repayments.
It’s easier to borrow money when you have a good credit rating and can also increase your chances of being approved for important loans and contracts in the future, from mortgages to your mobile phone contract. Your credit card history is based on how reliable you are at paying your bills. So, if you pay off more than your monthly credit card payment on time it could improve your credit score. Take care though because the reverse is also true, as your credit score will suffer if you don’t pay at least the minimum monthly repayments. You’ll also face interest payments and charges. It’s important to check the terms and conditions of a credit card so you’re fully up to speed.