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Credit card tips from savvy spenders

Do you have a credit card? Credit cards can be problematic if you don’t treat them properly, but they can also be a helpful tool in the right circumstances. How could a credit card help you?

Saga Personal Finance research revealed over 90% of people over 50 say they have at least one card, with over a quarter saying they have three or more cards – and that they are very switched on about the benefits credit cards give them.

More than half (55%) say they use a credit card to make the most of their interest free period between purchasing an item and the payment due date, and a fifth say they only use their card for larger purchases to take advantage of the protection provided by the Consumer Credit Act.

Credit cards benefits

If you have a credit card, it makes sense to try and get it to work as hard as possible for you, rather than the other way round.

If you pay off the balance every month, credit cards can be a good way to buy something now and pay later – but it is imperative that you can pay off the balance. Around three in ten (28%) of over 50s said they use their card to avoid spending their savings, and that they use it as a way to manage their money, as they pay off the balance in full every month. One in eight said they only use their credit card in an emergency.

With credit cards you’re protected for any purchase over £100 and below £30,000 – so if you book a holiday and the provider goes out of business, the card company should cover the cost. Or if you buy a faulty TV and the seller won’t refund your money, the credit card company will reimburse you.

Interest free periods can also be a useful component to credit card spending, as long as you know when they end. You could also consider transferring your balance to a card with an interest free period to get a better deal – but do check whether you’ll be charged to do so.

Some credit cards also come with freebies, such as air miles, rewards or cashback. Find out about cashback credit cards.


Credit card dangers

Although there are advantages to using a credit card, it is also easy to get yourself in trouble, so you should make sure to avoid these traps.

It can feel very tempting to just pay off the minimum payment of your credit card balance – but this is how they get you! If you only pay the minimum amount, you’ll start paying interest on everything left over. It’ll take a lot longer to pay off your debt, and you’ll end up paying a lot more than you borrowed.

Late payments can also come with a charge. Other companies may be able to see that you paid your bill late too, which could inadvertently affect your credit rating and your ability to get credit in the future.

Ultimately, the key with good credit card management is paying off your balance in full every month. If you don’t think you can do this, credit cards may not be right for you.


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