How to get the most from your credit card


For a budget conscious home a credit card can be a real help (as long as it’s used responsibly). You should never use a credit card to pay for things you don’t already have the cash for, but as long as you can pay the balance off every month so you never have to pay interest on the credit there are lots of potential benefits to having a credit card:

Building your credit rating

Pretty much everything you do, from starting a new mobile phone contract to paying your rent, can affect your credit rating. And you should always aim to stay on top of your finances so you can stay out of debt and build a solid credit rating. However, one way to actively work towards improving your credit rating is to have a well-managed credit card.

Every month that you successfully pay off the full balance on a credit card, and therefore demonstrate that you can use it responsibly, your credit score will get a little stronger and could help you when you need apply for those really important financial supports like mortgages and business loans.

Rewards and points

Some credit cards allow you to earn points and claim rewards, or get cashback when you spend. Many people take advantage of credit card rewards in a process known as credit card churning. Of course you’ve got to read the terms and conditions carefully and keep an eye on any changes along the way, but a careful user can see definite financial or material benefits from having the right kind of credit card.

The kind of rewards you might be able to get include cashback, gift cards and travel points that allow you to book full or partial aeroplane tickets or even entire trips away.

Avoid fees when travelling abroad

When you travel abroad banks will often charge you to make transactions with your debit card, or to take cash out of foreign cash machines. If you change money in the UK before travelling you risk losing out if the exchange rate isn’t in your favour, and it can mean having to travel with a lot of cash (not always a safe option).

However, you can usually use a credit card abroad without incurring any of these charges. For this reason many people have credit cards specifically for use abroad. They’re not spending money they haven’t yet earned – just ensuring that any money they do spend while they’re abroad isn’t bumped up by unnecessary transaction fees. Another tip – if you are going abroad it’s always worth letting your bank know in advance just to make sure they don’t mistakenly think the activity on your card is fraudulent.

Getting a credit card should be a carefully thought out decision, but it can be a great way to stay on top of your finances and plan for the future when it is used the right way.

11 Responses to How to get the most from your credit card

  1. My wife and I each have 1 credit card although they are seldom used. I remember doing hours and hours of research before finally picking the card. My problem was that about 4 months after I selected the card the people issuing it folded up and the card got moved to the parent company. Fortunately they still honor all the same conditions and so we get great rates and no annual fees 🙂

    • Sounds like you got a great deal Glen. One of my cards moved on to new ownership recently but I don’t often use it, think I need to start playing the rewards game more!

  2. My wife and I have two cards each. We love using them to get rewards points, though we’re not churning them…yet. As long as you keep your spending under control then I think they can be a great tool to use.

  3. Pauline says:

    The card has to work for your needs. I have a card with 0% transaction fees abroad because that is where I spend most of my time. In exchange it doesn’t have rewards, sure I’d like a free hotel night once in a while but the forex savings are much more important over the year.

  4. Jenny @ Frugal Guru Guide says:

    I love my credit card! I pay it off every month, and that 1-5% back is certainly a nice treat.

  5. My wife and I have one cash back credit card each. One is a rotating group of 5% back, the other saves on gas and groceries. It works out well and we make sure to pay it all off each month!

  6. Credit cards are not bad. You just have to learn how to use it well to your advantage. Like the tips here.

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