While you shouldn’t use your credit card for everything, there are some purchases that could be made easier by paying with your credit card.
If you have a credit card and you are regularly able to pay off the balance in full then you could benefit from making certain purchases on your credit card all the time.
However, if you are regularly paying off only a fraction of your balance from month to month, then it is best to avoid spending more on your credit card.
You could consider either transferring the balance to a 0% balance transfer credit card, or avoiding all credit products until you have finally cleared your debts.
Why use a credit card instead of a debit card?
A question commonly asked is what’s the difference between a credit card and a debit card? Similarly, why should I use a credit card instead of a debit card?
Of course, if you are able to pay off your balance, and you are never spending money that you do not already have, then you may wonder why you should be using a credit card in the first place.
There are many reasons for doing so, and they could help make your shopping habits and your finances a little easier to manage – and potentially rewarding.
Put simply, a credit card allows you to purchase goods and services the way you would with cash or a debit card, with the difference being that you owe money to the credit card issuer rather than the shop you spent it in.
The credit card issuer will give you usually between 45 to 56 days to pay them back, and usually in instalments, but with added interest – unless you pay it back in full and on time.
If you pay back the balance in full, you can still benefit from using a credit card. If, however, you struggle to pay off the balance in full each month, then spending more is only going to result in you having to pay more interest.
Credit card benefits: protection on purchases
While a debit card allows you to pay for items immediately and using money you already have, a credit card has other lesser known benefits, that when used wisely can have a positive impact on your day to day spending and finances.
Firstly, a credit card offers protection on purchases over £100 and up to £30,000. This is part of the Consumer Credit Act 1974, and entitles credit card users to a greater level of protection than if they made the same purchase with a debit card.
For example, if you booked a holiday using a travel agent and a few days before you fly off, you find out the company has gone bust and is no longer able to honour your purchase nor give you a refund, you would be able to claim the money back from the credit card issuer.
Budgeting with a credit card
Aside from protection on purchases, a credit card also gives you flexibility to decide what proportion of your monthly income to spend on your regular day to day items, and what to leave behind to pay on your credit card bills.
With careful planning you can budget your monthly allowance of spending on your credit card, and keep behind a regular amount to be saved.
For certain purchases, you can also get rewards depending on your credit card. Read on for our top 5 things to buy with a credit card.
Top 5 things to buy with a credit card
While a credit card can be good for many purchases, there are some you should almost always put on the credit card before parting with your cash, especially if you can get an extra reward out of it.
1. Travel cards and travel season tickets
If you get the train to work and back five days a week, every week, then chances are you already buy a monthly or annual train ticket.
By paying for a travel card or travel season ticket with a credit card, you can avoid having that lump sum taken out of your bank account every month, and instead, keep it behind in your savings for a few days longer.
Putting that regular purchase on your credit card can also help you budget more effectively – and give you breathing space financially, especially if your credit card gives you 50 days or so of interest-free credit.
If you have a 0% purchase credit card that lasts for 12 months or longer, then buying a one year season ticket and paying it off in small chunks each month will work out much cheaper, as there’s usually a discount for buying a season ticket in advance.
2. Holidays, hotels and flights
Paying for your holidays, including the accommodation and flights, on a credit card makes sense when it comes to protecting your large purchases.
Having a holiday fall through because the travel agent, hotel or airline has gone bust can be devastating, and if you can’t get your money back, then that’s only going to make matters far worse.
If you have an airline rewards card or travel abroad credit card, then you may be able to pick up airmiles and other rewards to use on your next holiday.
Some holiday booking sites may add on an extra fee at the checkout for using a credit card. This is usually a small percentage or a few pounds on top of what you’ve paid, but it’s worth weighing up whether the protection and peace of mind means that much to you.
3. Supermarket shopping
Making your weekly food shop with a credit card can help with budgeting your weekly spend, and if you have a rewards credit card, it could give you extra savings or bonuses to spend in store next time.
Compare rewards credit cards to see what loyalty points and discounts you can collect by simply shopping at your local supermarket.
If you’re not very good at budgeting then it’s worth looking over your weekly spend in detail and seeing what you can cut back on, and keep it to a more manageable and predictable budget each month.
4. One-off big purchases
Credit cards are best for the one-off big purchases, such as a television, a sofa, appliances or a bicycle.
Just like with a travel season ticket, if you have a 0% purchases credit card, you can spread the cost of the big purchase and avoid paying interest for a few months.
Compare 0% purchases credit cards and find deals that can help you make that one-off big purchase that little bit easier on the bank balance.
Some shops may offer you ‘0% finance’ for, a year or two, to buy their expensive products, but they usually mark up the prices as a result, so always shop around and compare before committing, whether you buy with cash or credit.
5. Christmas presents
Christmas is usually a very expensive time of year, and while putting the bulk of your spending on a credit card may not seem like the best option, especially if it means starting the year saddled with debt, there are some benefits in doing so.
First of all, your purchases will be protected if you bought any presents costing more than £100, so if the company fails to deliver your goods, you can at least get your money back.
Secondly, if you take out a balance transfer credit card in the New Year, you can transfer your Christmas indulgence balance to a 0% credit card, allowing you to pay off the debt in instalments without any interest added on.
If you budget correctly and are able to stick to your repayment plan on schedule, then doing so could make Christmas less of a financial burden.
If you have a cashback credit card, you can get rewards for buying the things you already planned to. Cashback credit cards work best around the Christmas period, giving you a chance to have a little money leftover to spend on yourself afterwards.
Don’t be tempted to spend more than you planned to just because you’ll be getting cashback. Stick to your budget and make sure you have a plan in place to pay everything back on time to avoid interest.
Use our table to compare cashback credit cards and see how much money you can earn by buying what you normally would.
- How to compare credit cards – Applying for a credit card with us is easy – our tables and guides can help put you on the right track
- How do credit cards work? – Credit cards can seem confusing but once you understand the basics they can help you manage your finances.