Credit cards are 50: how to make them work for you

Credit cards can bring all sorts of advantages – but if you don’t manage them well, they can also cause big problems for you and your finances.

This week marks the 50^th anniversary since credit cards were first introduced to the UK. Today, six out of ten UK adults have a credit card, making a total of 2.5 billion transactions last year, according to Payments UK.

That’s a huge number of people with access to credit and borrowing, but that also comes with the chance to rack up fees and charges, and possibly lead to debts that can spiral out of control.

10 ways to make your credit card work for you

Here are our 10 ways to make your credit card work for you – not against you.

1. Remember, it’s not “free money”

Sometimes people see credit cards as easy money. But it’s important to remember you’re borrowing money when you apply for one and use them – and you have to pay it back.

2. Set up a Direct Debit

Some of the heftiest penalties with credit cards are late fees. The easiest way to avoid these is to set up a Direct Debit every month. This ensures your payments go through in time every month, avoiding the chance you could forget.

3. Try to pay it off in full each month

Paying off the full balance of your credit card each month means you avoid adding any interest to the money owed

4. If you can’t pay it all off, pay as much as you can

Don’t get caught out by the “minimum repayments”. The interest will quickly add up if you do this. Plus, since this amount is worked out as a percentage of the total owed, the more you reduce the balance, the lower the minimum repayment will be – making it even longer before you clear the credit card.

5. Make a note of when 0% periods end

Whether a 0% Balance Transfer card or 0% spending card, once the promotional 0% period ends, the interest rate often rockets. Make sure you know when the 0% ends, and have a plan in place to pay it off in full, or transfer to another card with a lower rate.

6. Don’t withdraw cash

You’ll normally be charged a fee and interest on any cash withdrawals made with a credit card.

7. Keep within your credit limit

You’ll be charged fees if you go over your limit.

8. Check your statements

Mistakes can be made so don’t just file your statements when they arrive. Make sure you’ve been charged the right amount, and watch out for anything that you didn’t buy.

9. Maximise your benefits

If you use credit cards well you can earn cashback on everything from your food shop to your petrol. There are also cards that come with benefits such as free credit reports or fee-free use abroad.

10. Don’t tell anyone your PIN         

A simple one, if it’s only you who knows the PIN, it’s less likely anyone can use it without you knowing.