Credit cards aren’t only a practical tool for borrowing money; they also come with a host of additional potential advantages.

What are the advantages of having a credit card?

There are literally hundreds of different credit cards that you can acquire, so if you’re wanting to either get your first credit card or switch to a different kind of card, it’s crucial to think about what will be most beneficial to you.

The following is a list of the potential advantages that come along with having a credit card.

Chargeback in addition to protection under Section 75

You may have been instructed to use a credit card in order to make a purchase if you are planning to spend one hundred or more pounds on the item. This is due to the fact that credit cards come with additional safeguards, but debit cards do not.

Coverage in the event that you misplace your wallet or pocketbook

Money is highly improbable that you will be able to retrieve your cash if you misplace a wallet or handbag that has a significant amount of it. On the other hand, if you have the misfortune to be a victim of card fraud, you are afforded some legal protections that will prevent you from suffering a financial loss.

Your bank is obligated to immediately reimburse any fraudulent payments, unless it can provide evidence that there is a valid basis to withhold the refund.

Raising your credit score will benefit you.

It may be difficult for you to have access to the greatest credit deals if you have a poor credit history or a limited credit history. However, there are credit cards that are created solely for the purpose of enhancing your credit rating so that you might qualify for better bargains in the future. Keep in mind that these are likely to have smaller credit limits and higher interest rates than other options, so you should make sure that you pay the bill in full every single month. If you do not pay the payment in full each month, the creditor may choose to cancel your account.

Which credit card is most suited to your spending habits?

There is a wide variety of credit card options to choose from; some of these credit cards offer benefits in exchange for your spending, others are designed for use when travelling outside the country, and still others are great for allowing you to pay for expensive purchases in instalments over time.

This article provides an overview of the various categories of credit cards currently on the market. Check out our guide on the many kinds of credit cards if you want to learn more about the various kinds of cards that are available.

Most effective at paying off debt

If you have debt from a shop card or other credit card, you should think about applying for a balance transfer credit card that does not charge you any interest.

With one of these cards, you can transfer your debt from a more expensive card to a card with a 0% interest rate. Although the transfer will typically cost you a fee, the new card will provide you a certain length of time during which you will not be charged interest on the debt.

Because of this, you will have the opportunity to pay off the debt more quickly and save money because all of your payments will be applied directly to the debt rather than the debt and the interest.

The top option for earning perks and cashback

When you use certain credit cards, you may be eligible to get a cash reward that is exempt from federal income tax. This reward is typically sent into your account once per year.

However, you should only give them serious thought if you clear your credit card balance in full every month; otherwise, the interest charges would cancel out any benefits you might receive from using the card.

You can also apply for a reward credit card like Nectar or Avios, which will award you points in proportion to the amount of money you spend. These cards operate in a manner that is quite comparable to that of cashback cards and need to have their balances paid in full each month in order to avoid incurring any interest charges.

Ideal for use in international transactions

If you use your debit card to make transactions overseas, most debit cards will charge you a foreign loading fee. This is also the case with the vast majority of credit cards; however, certain credit card companies will waive this cost for transactions made outside of the country.

The most effective method for distributing the expense of a significant purchase

These credit cards offer promotional financing on purchases with a 0% interest rate for a predetermined period of time.

If you buy a new sofa with a price tag of £2,000, you will be able to break up the cost of the purchase into monthly payments without having to pay any interest for a period of 24 months. This is the longest deal that is currently available. However, you are still need to pay the minimum amount that is due each month in order to maintain the 0% APR promotion.

Things to think about before submitting an application

Before you apply for a credit card, you should complete the following procedures after you have determined the type of credit card that would best suit your needs:

Check the status of your credit.

It is in your best interest to monitor your credit score on a consistent basis because individuals with the highest scores are the ones who are provided the greatest discounts.

Your credit score will determine not only your credit limit (how much money you will be allowed to borrow), but also the length of any introductory offers, as well as the interest rate that will be applied to your future borrowings.

On the internet, you are able to get a free check of your credit score, and some companies that provide credit references will even provide you advice on how to raise it.

Confirm that you meet the requirements.

If you submit an application for a credit card, a notation will be made on your credit file. This means that if your application is denied, it will be more difficult for you to obtain a credit card in the future.

Because of this, it is usually better to confirm your eligibility first before doing anything else. The majority of companies who issue credit cards will make it possible to accomplish this on their websites in advance.

Make sure you have all of the necessary details.

You will need the following information in order to apply for your card once you are ready to do so: your name, address, date of birth, nationality, employment status, and salary.

There are three strategies to avoid using credit cards.

There are a few things that should be avoided at all costs when using a credit card, including the following:

Purchasing cash from another country

If you want to buy foreign currency before going on vacation, you shouldn’t pay for it with a credit card. Not only will your card provider charge you a cash advance fee, but most card providers will also charge you a higher annual percentage rate (APR), and you won’t get an interest-free period even if you pay off your bill in full and on time.

The same reasoning can be applied when purchasing gift cards and certificates.

Credit card and check payments are accepted.

It is no longer permissible for credit card companies to send out unsolicited credit card cheques; however, if you have any stashed away in a drawer or if you have opted into getting them, you should shred them as soon as possible.

Credit card checks are not protected under Section 75 in any circumstance, and using one will require you to pay a fee.

Taking out cash from an ATM

Withdrawals of cash are subject to a fee, a higher annual percentage rate (APR), and do not benefit from the interest-free grace period that is extended to other forms of expenditure on the card.

They are also noted on your credit report and can be considered by lenders as a sign of financial stress, which is something that could damage your capacity to receive credit and could make it more difficult for you to get credit.