Credit Cards are referred to as a “necessary evil” by certain people. But why is this? For plenty of reasons, credit cards have earnt a bad, it appears to be the case that if someone finds themselves in debt of any kind, the finger is always pointed at credit cards as the reason for this. Whilst it is undeniable that credit cards can be a reason for someone falling into some serious debt, there are many other reasons why someone can find themselves in this position – yet the credit card seems to be the first port of call for blame.
What it is important to understand is that your credit limit comes with responsibility, so it is down to you to not take advantage of your granted amount. To outline what it meant here, let’s look at an example. If you are given a credit limit of £5,000, you technically have that amount to do with whatever you may please. People fall into debt because they don’t actually weigh up how much they will genuinely be able to afford to pay back each month.
In saying all this, the fact of the matter is that credit cards have a lot to offer, given they used correctly and sensibly. Keeping up a good credit score will allow you to get the best rates on loans, whether that be a mortgage or a guarantor loan. In this guide, we will be talking through how to make the most of the perks that a credit card company may be offering and what sort of benefits you can expect.
No need for cash
One major benefits of having a credit card is that you do not need to carry large amounts of cash with you, regularly or even ever! You just need a small piece of plastic with you which lets you access an agreed amount of money, which is obviously going to be very useful in an emergency.
We are slowly moving into a cashless society, so having a credit card on you is a great way of carrying money which is not physical money. Furthermore, if your cash is to get stolen, it is pretty much gone. Whereas, if you get your credit card stolen, you can simply call the bank and have it cancelled.
Rewards Credit Cards
Certain credit card providers will offer a rewards credit card. What this means is that your card will allow you to tally up rewards for simply using your credit card in certain places and on certain purchases. In some cases, you can earn rewards simply by using the card enough times. However, please make sure if you are going to use it regularly that you pay back the amount in full each month to ensure you do not fall into debt or damage your credit score.
An example of a reward which most credit cards will offer is travel points. By using and spending on your credit card, you will receive air miles or points to go towards train travel which can be redeemed– reducing the overall price of the ticket, whether that be a plane or a train.
It is important to be aware that in a lot of cases, the points have to be used in a certain amount of time and can expire. Make sure you know how long you have to use these.
Some credit cards will offer the option for cash back. For any amount you spend, you are able to obtain a small amount of cash back which can add up for future spending and savings.
As has been mentioned previously, one perk of owning a credit card is that you do not need to carry cash with you. Well, this is convenient and great for when you are travelling abroad and planning to spend money in a place which has different currency to your domestic currency.
Furthermore, certain credit card providers offer a credit card which may charge a “non-sterling” fee for spending abroad. However, this fee should only ever be around the 2.5% mark on each purchase made. It is possible to get cards which do not charge this fee and they will give you real-time currency exchange rates. This can save you money if you receive a better currency exchange rate.
Low or Zero interest rates
Some credit cards offer a zero-interest rate. If you do have a card which has this zero-interest rate feature, it will usually only be for a short period of time. Nevertheless, some cards do have more permanent low-interest rates, rather than zero-interest. The benefits which are offered with low or no interest rates are great. Essentially, you are using the bank’s money to make purchases and then pay back that money when you pay off your bill for the cost of nothing.