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Tips for using your credit card

If used correctly, a credit card can help you spread the cost of purchases, earn reward points, manage debt and build your credit score.

These tips can give you confidence you’re using your credit card effectively.

1. Choose the right credit card for you

Your choice of credit card will depend on your goals. Do you want to make a big purchase? Are you looking to earn points for spending? Or, do you want to consolidate your credit card balances? When you're shopping around, compare the representative annual percentage rate (APR) offered by different cards, as well as any fees and charges.

2. Use the interest-free period wisely

Some providers offer an introductory 0% interest period on balance transfers and/or purchases. This can help you manage debt by giving you more time to clear your balance before being charged interest. 

Keep in mind, you should always make sure you can afford to repay anything you spend on a credit card. You’ll also be charged interest on the outstanding balance, once the interest-free period ends.

3. Pay more than the minimum

To use your credit card without having to pay interest on purchases, pay off your balance in full every month. This can also help you avoid building up debt. If you can't do this, it still makes sense to pay more than the minimum in order to reduce the amount of interest you'll pay. If it helps, you can stagger your repayments through the month so that you chip away at the debt.

4. Automate your repayments

Sometimes when you’re very busy it can feel difficult to manage all your bills and repayments. This can lead to late payment fees and damage your credit rating. The easiest way to make sure your credit card repayments are always made on time is to set up a Direct Debit.

5. Have the right credit card limit

You should be comfortable with the amount you spend on your credit card. To make sure this is the case, your credit limit should be set at the right level for you. If you need a little extra flexibility, and you know you can afford it, you can always ask your lender to increase your limit. On the other hand, if you're worried about being tempted to overspend, you can ask for it to be reduced.

6. Let your credit card protect you

Using a credit card for purchases of over £100 (and under £30,000) can offer you protection under Section 75 of the Consumer Credit Act if something goes wrong with the purchase. For example, you may be able to get a refund if a company goes bust before delivering your goods.

7. Look for rewards

Many credit cards offer rewards such as cashback, air miles or points that can be redeemed in stores or online. There are lots of different offers available, so you can shop around and check credit card details to find the offer that appeals to you.

While rewards are good, don’t get swept up in them. Make sure that all the conditions of the card suit you – such as the interest rate and annual fee.

8. Make the most of balance transfers

Balance transfer credit cards can be a good solution if you're looking for breathing space to pay off your credit card bills. To get the best deal for you, make sure you understand the balance transfer fee you will pay and the length of the interest-free period.