Benefits of Owning a Credit Card

Credit cards are beneficial to anyone if used sensibly. They offer many benefits above a bank debit card as well as peace of mind knowing that you have another form of payment.

There are different types of credit cards available from standard cards that will charge a set interest rate however this will be irrelevant for those who pay off their balance in full, always set up a direct debit to pay the balance in full each month so you never miss a payment and avoid charges on your account and a mark on your credit file.

Those that do pay off the full balance can use credit cards to benefit when making transactions over £100 and up to £30,000. Section 75 of the consumer credit act states that the credit card company is equally liable so should anything happen for example the retailer goes bust then you can ask the credit card company for a refund. With the current economic situation I believe a credit card is an essential item to protect you from the many companies sadly going under.

The credit card industry is highly competitive and therefore companies are always offering incentives to entice you to sign up for their card. There are cash back cards that reward you for using the card by giving you a percentage of the spending back in cash or vouchers. Other credit cards provide special offers, discounts from partner or sister companies.

The newest breed of credit card is the prepaid credit card. You preload the card with money and can then benefit from credit card protection and benefit from the other services offered above a normal bank debit card.

If you have a credit card at the moment it is worth searching around to see how your card compares with other cards on the market and most importantly whether you have the right type of card. If you pay off the balance in full then you should sign up for a reward card that provides the best benefits for you making sure that the points offered are worth a good percentage in cash back. If you don't clear your balance then shift the debt to a credit card that offers zero percent. I think all of them not charge a fee for shifting debt which is around 3 per cent however you can find credit cards with balance transfer offers of a year and more.

Kim has 5 years experience in the Finance industry. She enjoys writing articles on different financial related topics and money tips.