I love shopping and believe that we all deserve a treat every now and again. I admit that if I'm upset or in a bad mood, one thing sure to cheer me up is a shopping trip. I do believe that it's important to live within your means. I may stare through the window longingly at a Radley handbag but unless I have some birthday money or an unexpected bonus then I am happy to go and buy a pretty bag for about a third of the pricetag, and if I can get it on offer then even better!
I hate the idea of getting in to debt and have always been very wary of credit or store cards. I've known people who treat them as 'free money', spending to the limit then transferring the balances across again and again. That's not to say that I don't have a credit card. I do in fact and admit that I use it fairly regularly.
If you don't want to get into debt, that doesn't mean that you can't have a credit card. It just means that you need to be sensible with your Credit Card, make your Credit Card work for you, not the other way around.
Here are my tips for being Credit Card Smart:
Use your Credit Card to Build up your Credit Rating
If like me, you don't have much of a credit history (no loans or mortgage) it can count against you as much as having a poor credit score. If you want to get on the property ladder, a credit card, even one with a high rate of interest can help you out in this situation. Use your credit card to spend a set amount each month on something that you would be buying anyway (maybe one weekly shop?) and ensure you repay it in full every time, setting up a direct debit to repay the balance can help make sure you don't forget. After around six months or so of doing this it should start to have a positive impact on your credit rating and as long as you pay it off every month you wont be charged any interest.
Use your Credit Card to Protect Your PurchasesIf you make a purchase between £100 and £30000 and pay all or part of it on your Credit Card you are protected under Section 75 of the Consumer Credit Act, and your credit card company will be jointly liable if anything goes wrong with your product or service. This applies even if you've only paid a deposit on your credit card, so it is worth doing if you are making any large purchases or buying online. Again, do remember to pay off what you have spent in full to avoid being charged interest.
Use your Credit card when Travelling
There are a number of benefits to having a Credit Card with you when travelling abroad. Firstly it means that you have access to emergency money if something goes wrong such as a flight cancellation or illness. Usually you will be able to claim these costs back on your travel insurance but will have to pay out for them in the first instance and if you've been saving up all year for your holiday, you may not have that cash readily available. Another benefit of having a credit card when travelling is that you can get a much better deal on the exchange rate compared to exchanging cash. This means that you will get more Euro's (or dollars or local currency) to the Pound and your hard earned money will get you a few extra cocktails! Make sure you do your research first and get a card that has no sterling exchange fee and remember you may still be charged for cash withdrawals so it can be best to take along some currency as well as your plastic.
There are other benefits to using credit cards and plenty of ways that you can make them work for you including cards that earn you cashback or loyalty points, but remember to make sure that you only spend what you can afford to pay back in full the following month or you will be charged interest and your bargains will suddenly cost a lot more than you realised.
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