12 tips to help you get the most from your credit card

Want to know how to use your credit card wisely? Here’s the lowdown on how to maximise the benefits and steer clear of any costly mistakes

Lady with shopping bags

Many of us think we know what’s what when it comes to our credit cards, but there’s no harm in reminding yourself of some of the things you can do to ensure the plastic in your purse or wallet is working as hard as it can be.

Here’s our guide to using your credit card in the right way so you get maximum value and avoid unnecessary money worries.

1. Understand the different types of card available

First off, it’s important to familiarise yourself with the various credit cards on the market, as certain cards will be better suited to particular users.

For example, if you are looking for some breathing space with a balance, you might want to consider a 0% ‘balance transfer card,’ where you can avoid paying interest for the introductory period. This could be as long as two years or more.

Equally, if you’re planning on making a big purchase, a low-rate ‘purchase credit card’ can be an affordable way to spread the cost.

Alternatively, if you’ve got a bad credit history, a ‘credit builder card’ can help you rebuild your score.

You can compare the different types of cards on offer – and find out more about their features – by visiting our credit card pages.

Representative example: If you spend £1,200 at an annual rate of 19.9% (variable) p.a. your representative APR is 19.9% APR (variable)

2. Read the Ts and Cs

Going through your credit card’s ‘terms and conditions’ with a fine-tooth comb may not sound like much fun, but could prove a very sensible use of your time. The key is to do your research to find out about fees, make sure you understand all the rates, and note down when any introductory deals end.

You might find that there are, say, punitive interest rates for withdrawing cash with your credit card, or hefty  fees for using your card overseas.

3. Don’t make just the minimum monthly repayment

While it may be tempting going from month to month making only the minimum repayment on your card, these amounts are typically set at low levels. By paying off more than this, you can reduce the amount of interest you pay, and clear your balance a lot more quickly.

4. Pay your credit card off in full every month

Better still, if you can afford it, try and pay off your credit card in full each month. That way, you won’t have to pay interest, so your balance will go down a lot sooner.

5. Take advantage of a cashback or reward card

If you are disciplined with your plastic and able to pay off your bill in full every month, then you’ll have no interest to worry about. If this is the case, you may want to consider a card offering cashback or rewards, as this could be a great way to get more for your money. That said, don’t be lured in by ‘sweeteners’ until you’ve checked the underlying interest rate and other Ts and Cs are favourable.

6. Avoid late payments

A missed payment on your credit card could mean a hefty fee, as well as a battered credit rating, which could make it more difficult to borrow in the future. You could also find you lose a promotional offer – such as 0% on balance transfers or purchases. With this in mind, always do all you can to make your payments on time. If you don’t think you will be able to for any reason, speak to your credit card provider.

Representative example: If you spend £1,200 at an annual rate of 19.9% (variable) p.a. your representative APR is 19.9% APR (variable)

7. Set up a direct debit

The best way to avoid missed or late payments is by setting up a monthly direct debit to automatically repay your plastic as soon as the payment is due. At the very least, ensure this covers the minimum repayment, but ideally, aim for more.

8. Have a clear repayment plan in place

If you plan on making purchases on your plastic, make sure you’ve got a plan to pay off what you owe. This will make it easier to keep track of the amount you need to pay to be debt-free within a certain time-frame. Equally, if your balance is creeping up, it could be time to look at your outgoings to see where you can trim back

9. Prioritise your most expensive piece of plastic

If you have more than one credit card and can’t pay them off in full each month, prioritise the one with the highest rate of interest. Whatever you do, don’t bury your head in the sand. Debts won’t disappear on their own – they will all need to be paid eventually.

10. Don’t max out your credit limit

Remember that your credit limit – and how much you use of that amount can affect your score. Generally speaking, it’s best to try to use no more than 25% of the credit available to you. This means, for example, that if you can borrow £2,000 on your card, it’s best not to use more than £500 at any one time.

11. Don’t make multiple applications in a short space of time

Each time you apply for credit, a ‘hard search’ will be reported on your credit score. And, if you get turned down, this can have a negative impact on your score, making it harder to get approved by lenders.

Make use of MoneySuperMarket’s Eligibility Checker to scour the market for the best deals. That way, you can compare card offers you’re more likely to get accepted for without your credit rating taking a hit.

12. Keep an eye on your credit score

Make use of our Credit Monitor tool which allows you to check your score in just a matter of minutes. With this tool, you can check your score as often as you like, and you’ll also get free hints and tips on how you can improve it.

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