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Don’t worry – 7 Reasons why credit cards CAN be really good!

Once you know know how a credit card works, then consider using a credit card rather than your debit card, even if you have the money in your current account. Here the top seven ways to use your credit card to your advantage.

This is the second article in the Credit Card mini-series guide. To catch up, rewind to How Does a Credit Card work in the UK or fast forward to How to Get Credit Card Management Right.

  1. Use Credit cards to improve your credit score
  2. Credit cards as a temporary Emergency Fund
  3. Credit card rewards & cashback
  4. 0% Interest credit card offers
  5. Stoozing
  6. Credit card protection
  7. Business expenses on a credit card

Use credit cards to improve your credit score

Having a credit score in today’s world is important. You need it for the really important stuff like mortgages, right down to car insurance and mobile phone contracts.

To have a credit score, you need a credit history. A lender needs to see that you have a previous track record of being responsible and paying back money you owe.

Pro Tip: Learn how to improve your credit score here.

One of the easiest ways to do this is to use a credit card, even with a low credit limit. It can even help you with budgeting. Just remember the golden rule: always pay the balance in full each month.

Over time, your lender will increase this limit. If they do, don’t see it as a green light to max it out. You want to keep a healthy ‘credit utilisation’, which is ideally less than 30% of your total available credit limit.

More useful tips can be found at Credit Card Management – How To Do It Well.


Credit cards as a temporary Emergency Fund

Credit cards can be very useful as an emergency fund. Consider not tying up that precious cash in a low-interest account. Most importantly is get that cash invested. Next, if a financial crisis hits, then use a credit card. After that, you draw down from your investment funds to pay back the credit card.

Crucially, this strategy needs to be approached with caution. It only works if you can quickly pay the credit card off in full from funds elsewhere.

Check out this article for more information on where to keep your Emergency Fund.


Credit card rewards & cashback

Credit card rewards can range from cool crisp cash to points that can be exchanged for travel, days out or shopping.

  • Points – these are usually converted into a ‘cash equivalent’ and used against days out, travel or in-store vouchers. Above all, the trick is to make sure you know how much a point is worth because points with one retailer could be worth much less with another.
  • Air miles – spending gets converted into air miles and redeemed against flights. Avios is perhaps the best know air miles provider. Great for those into travel hacking. Whilst many cards come without a fee, those that do give you a significant boost, which should be considered by frequent flyers. See here for the best airline credit cards. City-break anyone?
  • Cashback – just want that cold hard cash in your hand? Then a cashback rewards card may be right for you. They pay you as much as 5% back on what you spend. Plus, it’s tax-free. Nice. Read here for the best cashback credit cards.

To maximise earning potential, use your card for day to day spending and remember to pay in full each month. If you don’t, this really doesn’t work and is a false economy.


0% Interest credit card offers

0% interest deals can be really handy. There are two main categories:

  1. 0% spending
  2. 0% balance transfers

If you’re struggling to make headway paying off a credit card that is accumulating interest upon interest each month, you may want to consider transferring to a card with 0% on balance transfers.

It can save you £1,000s and give you the breathing space you need to make real progress. Every payment you make is paying down directly on the balance, not on interest.

Remember these five golden rules to using 0% balance transfer credit cards:

  • Do not go over your credit limit or miss a payment. As a result, if you do, you usually lose the 0% offer.
  • They often charge a fee based on a percentage of the balance being transferred. This can make the 0% not as quite as good as it seems. Know the fee and do your sums.
  • Prioritise a no-fee offer over a deal that offers 0% for longer. It’s usually better.
  • Don’t use this card to make purchases or withdraw cash. This is meant to be helping you pay the balance back, not spend more.
  • Pay it back or move the balance to another 0% card before the free period ends.

For the 0% spending type cards, check out……..



Stoozing is an advanced strategy to exploit introductory 0% credit card offers. You need to be debt-free to make this work. The premise is that you use the 0% credit card for your day-to-day spending, whilst the money you would have used in your current account, you move to a higher interest (yet accessible) account where it starts earning interest.

This isn’t for the faint-hearted. You need to be debt-free, disciplined and well on top of your personal finance game. Here are the rules:

  • Never exceed your credit limit
  • Never take out cash on the credit card (you’ll lose the 0%)
  • Only make the minimum payments each month
  • Remain disciplined and stick to your normal monthly budget.

Stoozing can earn you a fair chunk of free cash. In other words, this is an advanced technique and needs to be managed well. If you don’t, it can hurt your credit score.


Credit card protection

When you make a purchase between £100 and £30,000, the credit card company has got your back. It is jointly liable to make sure the product or service is fit for purpose and as described, under the consumer credit act Section 75.

For that reason, it gives you that extra layer of protection when buying expensive appliance or flights with your credit card. It even covers you against fraudulent use.

Remember, in this instance, call your credit card company to access this protection, not the seller.


Business expenses on a credit card

You may need to use a credit card for work, where you are able to claim back the money each month. However, it can be a necessary evil, so why not make it work for you by using a card that offers reward schemes, air miles or cashback.

Here are your three golden rules:

  1. Get reimbursed as soon as possible. Pay your card straight away
  2. Use a separate card for work. Keep business and pleasure separate. It’s easier to manage. Trust us.
  3. Don’t spend more than your expenses. It’s way too easy to get carried away. Don’t be tempted to keep some of that reimbursement in your current account.

As long as you’re bringing your financial A-game and not carrying any other debt, using a credit card in these circumstances can make or save you £1,000s. Perhaps even both. Give yourself some credit.

This has been the third instalment on our mini credit card series. If you’ve found this useful and want to get more actionable tips to boost your financial fitness, hit the button. We really appreciate it.



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