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Tips for using your credit card

A credit card can help you manage your spending between pay days and may be a useful tool for building your credit history.

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

Many cards offer an interest-free period on purchases. This means if you pay everything you owe before the statement due date, you won't have to pay any interest at all. If you don’t make a full repayment, you will lose your interest-free period and be charged interest on your purchases. So always to try repay your credit card balance in full when you can.

3. Pay more than the minimum

To use your credit card without having to pay interest, pay off your balance in full every month. 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, as well as damage your credit rating. To make sure your credit card repayments are always made on time, you may want to set up a Direct Debit to your credit card.

5. Set 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, if a company goes bust before delivering your goods you should get a refund.

7. Look for rewards

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

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.