It’s easy to vilify credit cards as a means of racking up huge amounts of debt. Whilst it’s definitely true that UK consumers are often heavily indebted to their cards, they can still be useful tools to protect your finances and manage cash flow:
They Protect Your Cash
Fraudulent transactions and identity theft are rampant in this electronic age. Using a credit card to make online transactions makes a lot of financial sense: If the website is fraudulent, or your details are stolen and used to make a transaction, you’ll almost certainly be covered for anything coming out of your account. The same thing isn’t true with a bank debit card, and certainly not any kind of money order or cash payment.
Likewise, if a company goes bankrupt before you’ve received your goods, you should be covered. As long as you quickly pay off the purchase, it makes sense to use a credit card for most online and distance purchases.
They’re Convenient
So long as your credit card is part of a sound financial plan, and you’ve budgeted properly, it makes sense to use it instead of carrying vast amounts of cash. If you’re faced with an ATM outage, a credit card might well be the only way of paying for goods and services. It makes sense to have one for backup if nothing else.
They’re Great For The Traveller
These days, credit cards are the number one way of carrying money to overseas destinations. The same reasons that make credit cards a safe way to pay for goods and services at home make even more sense on holiday where you can’t always be sure about the security of an ATM or the honesty of a shop owner. Credit cards also mean that you don’t have to worry about carrying vast sums of foreign currency with you either. The exchange rate is often more favorable than an exchange service at home.
They’re Good For Your Credit Rating
If you have a credit card or even several, and always pay them back on time, it can be a good way of demonstrating your financial stability. Often, a lending company is more willing to give a loan or mortgage to an individual that has a credit history but makes timely repayments, than one with no credit history at all. Lenders keep detailed records about your credit limit as well as what you’ve repaid and when, so a clean credit card history is a great way of improving your score. Remember though: despite what you might have read in a credit cleaner review, it’s very difficult, if not impossible to remove a bad credit record, so make sure you make prompt repayments
They Come With Some Useful Extras
Credit cards often come with a useful interest-free period on both balance transfers and purchases, so they can be used as an effective way of managing debt, as long as that’s part of a properly planned budget. In addition, many cards often come with some enticing bonus offers that give you things like air miles, money off vouchers, and even enter into the business class lounges of airports. Shop around, and you could save a substantial amount of money just by using your card.
Proceed With Caution
Credit cards can be a great way to not only manage your finances but also to protect them. Just make sure your credit card use is part of a sound financial budget.
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