Credit Card Guides

Benefits of using a credit card

Credit cards are popular for a reason, but for many (especially those who haven’t used one in the past) the wide range of benefits and pitfalls are not apparent. Credit cards are not just a means of spending, they can be used to manage existing debt, borrow for cheap, or even earn money. That being said, there are a number of issues to bear in mind to get the most of you credit card. Here are some of the main pitfalls, and further down you can read about the wide range of uses they have.

Credit cards; Things to watch out for:


Credit cards come with their share of security risks. While cash isn’t the most secure either and debit cards can also be compromised, it’s easier for fraudsters to get their hands on your credit card details and use it without your knowledge. Have a look at our post on credit card security for more details on how to keep your card protected.


There are a range of charges you could be levied depending on how you use your card. Some you may not be aware of (such as the fees for closing your account or leaving it inactive too long). There are also a range of fees for withdrawing money, especially abroad. When you take cash out at the ATM with your card you will be charged interest starting immediately, and also have to pay a fee on the transaction.

In the case of using your card abroad, you could also be charged conversion fees among other things. If you read the terms and conditions of your card carefully before using it in a way you haven’t before, you can avoid most fees. Have a look at our posts on using your card abroad and credit card charges in general to get up to speed on what to look out for.

Interest rates

You can be charged for missing a minimum repayment and going over your spending limit, which could compound any interest you owe on outstanding amounts. This could start to add up, especially since with some cards the interest rate can increase over the lifetime of the card (as with purchase cards, for example).

This can result in a situation where it could take a long time to pay off the debt at the minimum repayments. If you keep an eye on the amount owed on the card and don’t use it in a way you had not originally intended, it can be easy to keep the debt under control.

Credit card benefits:

Debt management

In contrast to the previous point, credit cards can also be used to keep your debt under control. If you have an inconvenient outstanding debt with another card then a balance transfer card allows you to switch your balance over to the new card and not pay interest on it for a set period while you pay it off. There are drawbacks, including the fee levied on the amount you transfer as well as the risk of interest rates going up again if you can’t pay off the debt in time.

Other options such as money transfer cards are also a good way to get debt under control. They allow you to withdraw a certain amount as cash from your card (for a relatively lower fee), which can be used to pay off other debts.

Lending facilities

All credit cards function as short-term loan facilities since there will always be an interest-free period (depending on the transaction). Furthermore, cards such as a 0% purchase card allow you to make a large expenditure and not pay any interest on the amount until a set time, which essentially functions as a short-term loan with no interest.

However, if the amount is not paid off within the interest-free period there can be high interest rates charged on anything remaining so this is something to keep in mind.

Protection on transactions and purchases

One aspect of credit cards you might overlook if you haven’t used one before is the extensive payment protection they offer in comparison with cash or debit cards. Under Section 75 of the Consumer Credit Act, if any purchase between £100 and £30,000 is made in whole or in part with a credit card and the goods or services weren’t turn out to be unsatisfactory (or not what was advertised), you can get the money back from your card provider (who will then try to get a refund from the supplier of the goods or services). This protection applies even if the seller has gone bust or is not responding to communication.

It’s worth mentioning that this Section doesn’t apply to charge cards, and also that you may not be able to avail of the protection if you were deemed to have not used your card securely or the transaction.

Rewards and cashback

Some cards offer extensive perks and benefits for using them. They are ideal for those that can always clear the balance each month and spend enough to warrant the annual fee. As the names imply, in return you can avail of rewards in the case of rewards cards and cashback in the case of cashback cards.

The value of rewards on offer is usually higher with that type of card – but the catch is that they must be redeemed with certain merchant whereas the cash redeemed with a cashback card is just put onto your balance and can be spent anywhere.


Another more obvious benefit of credit cards is the convenience of being able to pay online, and also the advantage of having another means of spending while abroad If the card is lost or stolen a quick card to your bank can have the card cancelled and you can then be sent out a new card quite quickly.