People are divided into 2 camps – those who love credit cards and those who avoid these like a plague. I personally think credit cards are a powerful tool. The key with these is to know how to use these correctly.
For people who don’t have credit cards – imagining even having one is a scary thought. I will come out clean – I personally have 3. And I believe – that’s not a limit if I find something good that catches my eye.
Below I will give you a quick summary of why I think credit cards are great. I will explain how I personally use my cards. I will also mention which further cards I would consider if I find the right type of offer with exciting enough perks.
why do I like to use my credit cards
Credit cards are an interesting tool in my view. These can be helpful and powerful. At the same time these can become your biggest enemy if you don’t use these properly.
For me personally – I was always fairly good with my personal finance and money. I was always confident that I would not go splashing cash that I don’t have once I get my hands on a credit card.
Instead, I was really excited about all the benefits that credit cards can offer me. After doing my initial research into what types of credit cards are available I realised that reward credit cards sound about right for me and my needs.
Reward credit cards offer me loyalty points for every £1 that I pay with my credit card. Once I accumulate enough loyalty point – I am able to exchange these for cash vouchers.
Cash vouchers are only one of the perks I get with my credit card. There is a list of other things that I get.
Buying things with your credit card gives you an extra insurance in most cases. This is on top of the warranty that items like electronics are sold with.
A further benefit I see with using credit cards – I get to use someone else’s money and not have to worry about paying it back for a while. This way my money can be invested and I get interest payments into my own account.
This isn’t where the good stuff ends – using your credit card in a responsible way also allows you to build your credit history and boost your credit score. This can have a lasting impact on your borrowing abilities.
Lastly, renting hotels or cars mostly requires a credit card. I love to travel so these perks come in really handy.
what credit cards I have
So, as mentioned earlier – I currently have 3 credit cards. Well, technically only 2 of these are ones that I actually picked myself. The third was given to me by my work.
Focusing now on the 2 credit cards that I got myself and use daily. These do a fairly similar job in my head. Both give me rewards when I use these to pay for any goods or services.
Firstly, by far the favourite of the 2 cards I have – American Express Platinum Cashback card. This card is brilliant. I get rewarded with cashback for every expense that goes through this card. I even have some of my bills set to be paid on this card so that technically I pay less after I receive my cashback.
From the research I have done in the past – Amex was offering the best cashback rate in the UK. I have the more expensive of the 2 cards available with Amex. The reasoning for this is very simple yet will not work for everyone.
The cashback card that comes with a £25 annual fee offers a slightly higher cashback rate. The maths are extremely simple – as long as you spend annually over £10,000 the card with the fee will work out better for you.
I get 0.75% cashback on the first £10,000 and 1.25% on every pound spent above that.
The issue with Amex – not all places accept these cards. This is where having a back up card comes handy.
My pick at the time was Reward Barclaycard. I believe this card is no longer offered by Barclays. With this card I get reward points that I can redeem for cash vouchers. Currently Barclaycard offers cashback card however the cashback rate is significantly below the Amex one.
why would I need more credit cards
I try not to go crazy with my credit cards in order not to have too high utilisation rate. This can negatively impact your credit history.
However, even though I am far from maxing out my cards – I can potentially see myself getting other cards in the future.
Currently I don’t have a travel credit card and this is something that I want to explore. These cards offer favourable exchange rates when travelling abroad.Â
One other product I might need to look into – a business card in case I decide to register a company. This clearly won’t be used in my daily life however it will definitely add more plastic into my wallet.
There are 2 other products that could be of interest to some however I hope I won’t have to use these – purchase cards and balance transfer cards.
Purchase cards allow you to buy an expensive item and spread the cost of it over a period of time. The great thing about these types of cards – they do not charge you interest for the initial purchase period.
Balance transfer cards on the other hand allow you to move your credit from one card to another. Balance transfer cards come with a period where no interest needs to be paid. This can be a great tool to use for those who found themselves in a tricky financial situation. Using this card can help you clear your debt without paying astronomical interest fees.
summary
Credit cards divide opinions. Some say these are the worst thing that exists. Other use these daily and love all the benefits these offer.
As you can probably guess from the above – I am in the camp of people who uses their card and squeezes benefits out of these. I see no reason not to benefit from financial products offered to all of us.
The key with any credit card in my view – use this carefully and responsibly. Make sure you only spend what you can afford to pay back immediately. Never accumulate debt as this will cost you a fair bit. APR’s on credit cards can be triple digit percentages.
There is often a caveat with credit cards – if you are not able to clear your debt monthly, your rewards can be withdrawn by your lender. The bigger cost however will be the interest rate you will be charged. Some cards charge as much as 35% annually.