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Many people have credit cards but we do vary in the way that we use them. They can be extremely useful but for some people they can also be very expensive. There is no need for them to be extremely costly though and there are things that you can do which will make sure that you use them to you advantage.

Advantages of Credit cards

Credit cards are more convenient than carrying cash and that is why many people prefer them. They also have insurance with them which means that if you make a large purchase and it is not satisfactory, they will refund you. This will happen if you contact the retailer and cannot get compensated by them, you can then go to the credit card company. This is one reason why many people prefer using them when they are shopping online. They will feel protected so if they order something and it does not arrive or is not as described and they cannot get a refund from the seller, they will be able to go to the card issuer for help with it. People will often feel more secure using a credit card online rather than other ways of paying such as a debit card or BACS as it is more secure. Again, there is the protection from the card issuer with regards to fraud and so you should get compensated for any money that is stolen as a result of your card details being intercepted.

Some credit cards also have a cashback or other reward scheme. This means that you will get something back when you use the card. They will often give more back if you spend more on the card and so it can be a way of getting rewarded for using that particular card.

Another big advantage to using a credit cards is that you do not have to pay for the items right away. This works by you getting interest free credit for up to six weeks on purchases. You will then have to pay for the items when you get your monthly statement. You will have two options, to repay the card in full at no charge or to repay just a minimum amount which will include and interest charge and then leave the rest of the balance outstanding.

How to use them well

It can be tempting to spend on the card and then not repay it in full so that you can enjoy delaying paying for things. This can allow you to buy more things than you would normally be able to afford and you will be able to get them right away. However, it is really easy to forget about the cost of doing this. As the interest is paid monthly it is hard to see how much you are paying in total over the time that you leave the balance unpaid. It is therefore much better to repay the balance each month. This is really simple to set up using a direct debit and then there will be no chance that you will then forget to pay it and be charged. Of course, you will need to make sure that you have the money available to repay it. Therefore, it can be best to keep a close track of how much you are spending to make sure that you spend within your means and therefore that you will have enough money to repay it. You will also be wise to set up the direct debit date so that it is just after you get paid and you will then be able to be more likely to have the money available to spend.

What to avoid

If you have a cashback card then it is important to avoid overspending. This can also easily be done even without cashback, but the cashback can make it more likely. This is because you may get more cash if you spend more on the card or more rewards if it is a reward card. This might tempt you to use the card more than you normally would. This is okay if you are using it to buy things that you would normally use cash to buy, that you would have bought anyway. However, if you start buying extra things just because you feel you will get more rewards or cashback then this is a problem. This is because the reward will just be a very tiny proportion of what you are spending and you will be paying out a lot more than you get back. So just try to use the card as normal and see any rewards and cashback as a bonus rather than trying to find extra things to buy. Do not use it as an excuse to buy things that you do not really need.

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