It’s MONEY MONDAY – the weekend is over so lets get serious!
And here we goooo, the Value topic for you beauties today is a question that I’ve received countless times…
…Choosing a credit card.
How many credit cards do you have? Do you even have one? Why should you have one? Which one is even best for me?
SO MANY QUESTIONS.
Lets start with basics – my reasons why you should have a credit card.
1. Credit cards are an important way to build up your credit score.
You may not care about your credit worthiness now, but it will be important when you start thinking about buying a house, getting a car on hire purchase, taking out insurance and sometimes even when applying for another job!
You can’t get a credit history until you start holding some credit! Debit cards operate on a cash basis, so don’t mean anything.
You don’t even have to use the credit card all the time – having a credit card to your name and making all the payments on time will do wonders for your credit reputation.
2. Extra consumer protection
Generally, when you buy an item on your card, the card company is jointly liable. This means that if you need to claim for goods from the seller, the credit card company has equal responsibility with the retailer for your claim.
This is ideal if the original retailer is not playing ball or, worst case scenario, goes bust – you can put your claim through to the credit card company…… ANYONE BOUGHT A LOAD OF FAULTY HMV GOODS AND NEED TO RETURN THEM? *cough*
Even the most well-meaning saver may not have enough cash for when an emergency hits. Credit cards provide you with extra float for times when you don’t have the cash available right now, but you know you will next week. (and you will of course, pay back the debt right away, RIGHT? AH? AH?)
You can spend £100 on your debit card, ORRR … you can spend £100 on your credit card, pay it back a month later AND get points/cashback etc in return. Why shouldn’t you be rewarded for your spending?
And now – the big question.
Which Credit Card to choose?
There are so many to choose from, it can be confusing. It can also be very tempting just to sit there and stick with the card you already have.
DON’T GIVE UP.
When thinking about a credit card, you need to consider the following:
The number of us who have had the held the saaaame current account at the saaaame bank ever since we started banking is un-believable.
I spent 2 years using a credit card that didn’t give anything back. And just because it was the same provider as my bank account, so it just made sense at the time right?
NO. Non. Nien. Niet!
Your custom is valuable – if banks are giving you poor service and no reward, you should SWITCH. It’s really not as much hassle as it used to be!
A lot of banks have a dedicated switching service and many of them are PAYING YOU to switch these days too!
2. The Bonus
So there I was, spending on a card and paying it back a month later. However, soooo many credit cards these days offer some sort an additional bonus for using them such as cash back, airmiles, nectar points, Clubcard points.
Have a think about how much you actually will spend and what reward would suit you better. There’s no point getting a cash back when you’re only going to spend a small amount. A points scheme might be better, as they may be able to be exchanged for something of higher value!
3. Joining incentives
THERE’S MORE? On top of the reward, there are numerous ‘joining’ deals to encourage you to join.
For example, if you spend a certain amount in the first 3 months, the BA credit card offers 9,000 miles (pretty much a return flight to Europe).
And the Freedom Rewards Barclaycard offers a £30 shopping voucher when you spend £500 in 3 months.
Joining incentives change all the time – choose one which suits you!
And, some providers even do cashback for new joiners! TopCashBack is offering up to £80 for signing up to an American Express card online. (for more details on cashback, see my post “GET PAID TO SHOP ONLINE” )
Face Value Sensible Saving Tips
Make your credit limit as low as possible. Some credit cards will give you a limit of up to £5,000 as standard – if you don’t need that, get it lowered. This way you won’t spend more than you can reasonably manage.
Pay off your balance IN FULL every month.
Late payment charges are rid-iiiiculous in comparison to the amount of money you owe.
£10 in interest may not seem like much but it adds up and is the most inefficient way of borrowing money each month. Naughty!
Paying your bill is as easy as any other online payment, you can even set up a direct debit to send payment automatically DONT BRING THE ECONOMY DOWN – PAY OFF YOUR DEBT!!!!!!
Put all your big-spend consumer items on it for additional purchase protection.
Close any credit accounts you don’t need – and this means formally closing it, not just stopping use – although having a credit card boosts your credit score, having too much available credit will also reduce it!
And finally – NEVER draw cash using it – a credit card sin for newbies! This is so expensive, credit cards are for credit, not cash!
I hope these tips have helped you – my motto is:
” If you’re going to spend – SPEND SMART. “
Sooo – thoughts?
Is anyone particularly pleased with their credit card deal?
Who’s STILL with their very first bank? Hands up!
What would your rather earn, cashback or points? Would love your thoughts guys!
Other than that, have a lovely week FaceValue Friends! (Ahhh, friends)