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Most of the financial advice you see will tell you to avoid using credit cards at all costs, cut them up, and never think of using anything but cash (or your debit card) again, but is that really good advice?
Although it is never a good idea to regularly use credit cards for extravagances you cannot afford, it can actually be advantageous to use credit cards in some situations, which we will look at now…
When you have 0% interest
Many credit cards offer 0% interest on purchases or balance transfers from time to time. If you are able to obtain one of these cards, they can be very useful for spreading the cost of essential items like car repairs or a new washing machine that you really need, should you not be able to afford the full amount. They enable you to get what you need when you need it without paying the interest that you might otherwise be charged in that situation.
0% balance transfer cards are also really good for lowering your interest burden if you have other credit cards that you are currently paying off.
Obviously, you should only use a 0% interest card to buy new stuff if you are confident you will be able to pay it off in time, but if that seems likely, it could really make sense to use a credit card.
When you earn cashback
If you use this site to compare credit, you will see that a lot of credit card companies offer cashback rewards to anyone who uses them. Effectively, this means you will get a percentage of anything you spend back at the end of each month, which means you are actually getting a discount on whatever it is you are buying with these cards. Providing you pay off the balance in full at the end of every month, this is actually an excellent way to save some money. Just make sure that you only use it for qualifying purchases and you only buy things you would normally buy anyway and this is a great way to make your money go further.
When your credit card will protect you
When you pay for goods and services using a credit card, you will typically get a greater level of protection should those purchases go wrong because credit cards tend to offer a high level of fraud liability. So, if you’re buying something online from a company you haven’t used before, for example, or something high value like a vacation, which has the potential to go wrong, it could make good financial sense to pay with your credit card – again just make sure that you pay off the balance in full at the end of the month and it won’t cost you any more to do so but it could save you a fortune if your purchase goes wrong!
As you can see, it does sometimes make sense to use a credit card, providing you’re sensible and you trust yourself to pay it off and avoid interest, so don’t go cutting up all those cards just yet!
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