4 smart ways to use your credit card
How to reap the rewards by playing your cards right
Credit cards often come with a bad reputation. But if you always pay on time – and if you get credit card savvy, not only will you enjoy free credit, but you’ll land neat rewards and make year-round savings. Here are four plastic possibilities to explore.
A big-ticket card
Use your regular card for big one-off outlays such as car insurance, a holiday booking, a travel season ticket or electronics. Scan the market and apply for a new card with zero percent interest on purchases and balance transfers and a long repayment time. Transfer the amount owing on big-ticket items to the new card as soon as possible with a plan to repay it at the end of the zero percent period, or sooner. Save up for the repayments in a bank or savings account which pays you some interest. Balance transfer offers now go up to three years or more, but consider a shorter period combined with a zero or low transfer fee. Be sure not only to repay the balance on time, but to set up a direct debit to repay the small minimum amount required by the card each month – or you will lose the zero percent deal.
A reward card
Many cards try to woo us with the promise of freebies and rewards. But like anything bearing gifts, these little charmers probably expect something in return – so pay close attention to their fees and possible hidden charges. If the small print meets your approval, however, you might be in for a great deal with cards offering cashback and vouchers.
An insurance card
If your holiday operator goes out of business, your credit card should come to the rescue. It won’t book you a new holiday, but you should be protected for most purchases over £100 and up to £30,000. Your card provider should cover the cost even if you only paid an initial deposit by card. And if you buy a defective item with your card, perhaps online, and the seller disappears, Section 75 of the Consumer Credit Act guarantees your refund. The rules, however, are different for debit cards.
A holiday card
The pound is weak enough for most of us to have to worry about excessive non-sterling transaction fees and hidden commission while travelling outside the UK. Thankfully, using a credit card to make purchases abroad is free with a wide range of cards. However, using it to withdraw cash overseas is only free with a handful of cards. Smart users will avoid cards which charge for both.
Before making financial decisions always do research, or talk to a financial adviser. Views are those of our mentors and customers and do not constitute financial advice.