Tag: credit card help

4 Benefits of Using Your Credit Card Sensibly

Written by Alex Swindells on October 13, 2022. Posted in Debt help.

Credit cards are common in our society, and many people use them to pay for a large range of things, from the weekly grocery shop to washing machines and other household appliances. But just because we know about them, it doesn’t mean we know about the benefits that come with them.

If you know how to use a credit card wisely, there are an array of advantages that they can bring you and your credit score.

Here are 4 benefits of using your credit card sensibly.

Benefits of a credit card

1) A credit card can build your credit rating

The amount you can borrow from Lenders, and the associated interest rates depends on your credit rating.

A credit rating is what banks and other lenders use to establish the risk of lending you money. The rating is typically a three-digit number based on your credit report. The credit report is a record of how you’ve maintained bills and paid off debts in the past. The higher the number of your credit score, the better the credit rating. Different credit reference agencies have their own scales when it comes to establishing credit ratings, so yours might look different depending on who you use.

Your credit card account and payment history form a significant part of your credit report. This means that using your credit card responsibly and paying it off regularly can improve your credit rating.

Better credit ratings can make it more likely that you can access lower rate, or higher value lending, such as a mortgage. They can also increase your chances of getting better deals on things like mobile phone contracts.

There are different ways of improving your credit score, but they can all help you with bigger purchases later on, including car loans.

2) Credit cards can give you extra security

When paying for things online, there is always the risk that the items you order won’t be what you expected, if they arrive at all. This is where a credit card can help.

By paying for online purchases through your credit card, you can have extra protection concerning those products or services. If you are unhappy with the service or product you have received, you can request a chargeback through your credit card company. This is because of Section 75 of the Consumer Credit Act 1974, which means you can request a chargeback for numerous reasons, including if the merchant has closed down or if the product doesn’t arrive to name a few. It doesn’t apply to debit cards.

For Section 75 of the Consumer Credit Act 1974 to be in effect, the purchase must be over £100 but under £30,000. However, you don’t need to have paid the full amount on your credit card.

This extra protection can also apply to booking holidays, such as in some hotels and airlines.

3) Credit Rewards

Using your credit card isn’t just about credit ratings and protecting your purchases, although they can be useful. You can get rewards by using it too.

Several credit card companies offer rewards to whoever owns the credit card when an eligible purchase has been made. By buying the likes of groceries and petrol on your credit card, you can gain credit card rewards through points for every pound spent.

Different credit cards can have different rewards available, with some offering cashback on items and others offering air miles. Reward points to be spent elsewhere, such as in restaurants or shops, could be another reward available for some credit cards.

For example, credit cards that offer air miles can be popular with people who have to travel frequently as they can offer discounts on flights. This can potentially apply to other elements of travel such as hotel costs too.

If your credit card offers cashback, it should be noted that some companies need you to log in to your account and have your settings allowing you to receive said cashback.

4) Responsibly using your credit card can increase your spending power

When using your debit card, you are limited to the amount of money you have in your current account, regardless of your situation or extenuating circumstances. With a credit card, you no longer have this issue.

By using your credit card responsibly, you can increase the amount of credit you have available to spend. This is particularly useful when an important purchase has to be made, or something immediately needs replacing, especially if it is an expensive item. Sometimes you just don’t have enough savings in your current account to cover unforeseen circumstances, and that’s where a credit card comes in. In the cases of those unpredictable emergencies, they can act as a safety feature so your life can continue, and you can pay off the money in manageable instalments later.

As well as increasing your spending power, using your credit card responsibly for a bigger purchase can also mean there are more rewards for you to gain on your credit card account, whether that be through cashback, points or air miles.

Remember, any credit borrowed from your credit card must be repaid.

Do you need help with credit card debt?

In January 2022, the average UK household’s credit card debt was £2100, which may increase as the cost of living rises.

There are various ways in which Swift Debt Help can aid you with your credit card debt, including offering advice to those who need it. Whether you need help to organise affordable payments, legal advice or just someone to talk to, we are here to help you get control of your credit card debt.

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

How To Efficiently Use Your Credit Card

Written by Alex Swindells on September 30, 2022. Posted in Credit Score.

A credit card can help you effectively manage your finances, improve your lifestyle, and expand your financial options. For example, a credit card can help increase your credit rating which is reviewed by most lenders.

But how can you efficiently and effectively use your credit card and avoid getting yourself into overwhelming credit card debt? First, let’s explain what a credit card is.

Credit cards are a great way to make large purchases that you otherwise would not have been able to do. As you may already know, with a credit card you will have a credit limit (an amount that is available for you to spend), which, if you start to use your credit, you will be required to make monthly repayments as well as pay any interest gained. Some credit cards may have a 0% interest rate for a limited time; however, ensure that you know and understand your interest rate before you start using your credit card.

How To Use A Credit Card

As previously mentioned, if used sensibly, a credit card can help to improve your finances and, overall, your lifestyle. However, it can be easy to use your credit card in the wrong way, getting into debt that is unmanageable.

So, below are a few tips to help you use your credit card sensibly and to stay on top of your debt.

1) Spread The Cost

A credit card is good to have when an unplanned event occurs, resulting in an extra expense. The credit you have available can be seen as your credit for emergencies.

For example, if your car suddenly breaks down, but you don’t have the money to fix it, then this is when having a credit card is handy. You can pay to have your car fixed without affecting the money you need to live. Additionally, you will be able to spread the cost out.

Being able to make a big purchase and spreading the cost over several months is particularly useful if your credit card has a 0% interest rate (the terms and conditions of your credit card, including interest rate details, should be provided when you apply for your credit card).

Additionally, it can work out cheaper to use your credit card for big leisure purchases, such as buying a new TV. Rather than paying for the TV in monthly instalments, which usually comes with a high-interest rate, you can pay for it in full by using your credit card.

2) Pay The Balance

Only use your credit card when you know you will be able to pay off the balance. If you are considering using your credit card to pay for a large purchase, consider whether you will be able to afford to repay it through monthly instalments.

If you do not think you will be able to repay what you have borrowed over a reasonable amount of time and without it putting you further into unmanageable debt, then you should not use your credit card to make the purchase.
Remember, a credit card is good to have in an emergency or to ease your financial situation. When you start making unnecessary purchases that you cannot afford, then that is when having a credit card can lead to unmanageable debt and cause your credit rating to fall.

3) Limit Credit Card Usage During A Mortgage Application

When applying for a mortgage, it is advisable not to overuse your credit card, particularly during the months leading up to you searching for and comparing the best interest rates that you may be offered.

This is because you need to demonstrate to lenders that you have control over your finances; that you can manage your earnings and expenditures sensibly and without the use of continually using credit. The higher your debt, the harder it will be to secure a mortgage offer from a lender.

When considering whether you can actually afford a mortgage, lenders will look at your credit report, which will include details of your credit card limit and how much you have used. The more credit that you have available, the better it will look to lenders because they will see that you are not having to rely on this credit to keep on top of your bills.

Your credit report will also detail any late payments you have made, which we look further into in the next tip.

4) Avoid Late Payments

If you fail to pay your credit card bill on time, then not only could this show up on your credit report and lower your credit rating, but you could also be charged a late fee, putting you further into debt.

Additionally, you may be asked by the credit card company to pay back the amount you owe in full, or they could even try to take you to court. As a result, your credit report will be negatively affected, making it more difficult to gain other types of credit.

If you know that you may struggle to pay your credit card bill on time in the future, then it could be worth getting in touch with your credit card company because they may be able to reduce your payments or pause them temporarily.

5) Avoid The Minimum Payment

When using your credit card, try to make more than your minimum payment each month. If you only pay the minimum amount each month, then it could take years for you to repay what you owe, particularly if your credit card has a high-interest rate.

Ideally, try to pay off a large chunk each month via direct debit or, if you can, pay the full amount of what you owe each month, increasing the available credit that you have, which will also look good on your credit report.

6) Do Not Make Cash Withdrawals

Do not use your credit card to make cash withdrawals because your credit card company will charge an extra fee, which will increase the amount that you owe that month. Then, if you are unable to repay what you owe, again, it will impact your credit score.

If you do need to withdraw cash, consider applying for a money transfer card, but be aware that there will still be an extra fee involved.

We hope that these tips will help you to efficiently use your credit card, easing your financial situation instead of putting a strain on it.

However, if you are struggling with credit card debt and are unable to repay what you owe, then an alternative debt solution may be worth considering, such as an Individual Voluntary Arrangement (IVA).
With this debt solution there will be IVA Protection, so to find out more, get in touch with Swift Debt Help.

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.