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What's Best Practise For Using Credit Cards?

Aug 17, 2007
It's a question that most people who use credit cards might ask - what's the best practise for using a card? Especially if your getting ready to apply for a new card, the question may be on your mind - since much of the advice about choosing a credit card focuses on how you'll use it. Most financial experts will give you a short, sweet answer to that question: don't.

That answer is a bit too simplistic, though, and ignores the way that today's economy works. The truth is that many people have been forced to apply for a credit card because it's nearly impossible to carry on business without one in our modern world. If you try to reserve a room at an inn or lodge, you'll need one to place your reservation. You may get special discounts at the petrol pump if you pay this way. And it's nearly impossible to place an order over the telephone or the internet without one.

It's become popular to paint our national use of credit cards in dire colours, and to turn the pretty plastic bits into veritable demons, lying in wait to tempt us to throw away our life's earnings on the chance for instant gratification. That point of view fails to take into account the many benefits of going about our business using credit. For instance:

- Charging your daily expenses on your credit card is a good way to track your expenses and maintain records for tax and budget purposes.

- Paying for your purchases with plastic means that you don't have to carry cash with you - and if you lose your wallet with no cash in it, your losses are very limited.

- Paying on credit means that you can take care of emergencies when they crop up and pay for them over time. No need to store your perishables in a neighbour's icebox until you save up enough for a second-hand refrigerator - you can whack it on your credit card and have the use of it while you pay it off.

- By choosing wisely when you apply for a credit card, you can actually save money. Reward points and cash back are built in discounts on your purchases that you wouldn't get if you paid in cash.

With all that in mind, what's the answer to the burning question? The best practise for using credit cards depends on what you're doing with them. You may:

- Charge your daily expenses and pay off the account every month.
The benefits:
o No interest charges accrue as long as you pay off the balance on time
o Discounts on ALL your purchases if you use a cashback card and shop at the grocer and corner stores
o Accumulating reward points that can save you money on gifts for the holidays if you use a rewards card
o Discounts on your motoring expenses if you use a gasoline credit card
o Free travel if you use a travel rewards or airline miles card

- Use a credit card to pay for major expenses and pay it off over time
The benefits:
o You get the use of your purchase while you pay it off.
o Many credit card companies offer additional insurance on purchases made on them.
o Protections if your purchase is defective or damaged.
o All of the above benefits of cash back or rewards cards

- Only use your credit card for emergencies
The benefits:
o No interest charges unless you actually use the card to charge purchases
o The comfort of knowing that you have an emergency fund if you need it.

You can use any of the above methods, or all of them in concert to reap the most benefits from the use of credit cards. In fact, the best way to use one is to hold one for everyday purchases that offers you reward points or cash back, and a different one that offers low APR for major purchases. Some other 'special use' options you may consider are one strictly for use at the petrol pump, and one for use overseas.

You'll always get the best credit card UK companies offer if you compare at good comparison websites before you apply there. You can learn about credit cards and research the best offers, then apply for a credit card online through one of the best current offers.
About the Author
Jon Francis has been involved with finance for many years! With an in-depth knowledge of the credit card UK market help helps others get the best from a credit card.
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