How To Use A Credit Card Well | Money Tips

Money is a big topic. Especially as a student, it’s vitally important to budget, think about finances and plan how you use your money. Whatever your priorities, there are different ways that you can afford to do the things you love, including credit cards. They can be a scary prospect, but used well they’re a really powerful financial tool that can actually help you both now and in the future.

I’ve teamed up with, experts in money and short term loans, to bring you this guide on using a credit card well.

Use a Credit Card Well

Credit Card vs Overdraft

The cost of overdrafts is, generally speaking, on the rise, while credit cards tend to offer a wider range of benefits which include:

Improve your credit score

Can avoid interest or fees

Help to spread costs

Credit cards are a great way to spread costs or to improve your credit score, which is really beneficial for the future when it comes to buying a car on finance, getting a mortgage or other forms of loans.

5 Top Tips For Using A Credit Card Well

If you use it wisely, a credit card can be really beneficial for your finances, budgeting and future planning. Follow these top tips and you’ll really benefit from your credit card!

1. Know How It Works 

Before you get a credit card, let alone start using it, you should make sure you fully understand how they work. This creates the foundation for using it well!

Credit cards are a form of loan. You spend money on credit knowing that you’re then going to pay it back at a later date. Unlike a normal loan, there’s no fixed date by which you have to pay the money back so it’s a great way to manage bigger payments.

This doesn’t mean you should spend whatever you want. To use a credit card well, you should only spend money you know that you can afford to pay back without issue later. This is because you’ll be charged interest on any money you borrow that rolls into the next month.


Different credit card companies, and even different cards offered by a single company, will charge different amounts of interest on the credit you use. The interest means that, at the end of the month, you’ll be charged a certain percentage of the credit you’ve spent and not yet paid back. This is charged to your card.

If you have paid the card in full that month, you won’t be charged anything.

Minimum Repayments

Every card will have a minimum monthly repayment. This is the amount you have to pay back on your card each month, otherwise you’ll incur fees. This could be a specified amount, as little as £5, or could be a percentage of your credit.


Every credit card will also have a limit. This is to help keep you safe from borrowing too much money. Your first credit card will have a smaller limit that will rise in time when you prove yourself to be a reliable borrower. If you go over your credit limit, you’ll incur extra fees.

2. Know What You Want It For

There are multiple reasons why people might get a credit card and this could change throughout the time you have your card, but starting out knowing what your aim is is really important as it will help you use your card more wisely.

Spreading Cost

Credit cards can be used to spread the cost of more expensive payments, anything from festival tickets to a new laptop. Credit cards have a minimum repayment, but otherwise don’t have a time limit on when you need to pay back the money you borrowed on credit. This can help make expenses more affordable, but remember to budget for the repayments, taking interest into account, so you do pay the money back over time. Otherwise you can get into more debt.

Building Credit

You can use your credit card for the purpose of building credit. It can be really helpful to have a good credit score even if you don’t need it right now. It takes time to build up your credit history, so the sooner you start the better.

To use your credit card to build your credit score, you should make small but frequent purchases with your card and always ensure you pay them back in full. This helps to steadily build up your credit file, showing that you can be trusted with borrowing money.

Short Term Borrowing

Rather than dipping even slightly into your overdraft, you could use your credit card to borrow small amounts of money if you’re suddenly in a pinch. This is most effective when you know that you’ll be able to pay it back within a couple of weeks, but need a way to cover an unexpected cost in the meantime. It is essential, however, that you factor in the minimum repayment if you’re going to do this as you don’t want to incur extra fees.

3. Repayments

The best way to use a credit card effectively is to make regular repayments, factoring these into your budget. Set up automatic minimum repayments so you don’t have to worry about accidentally getting extra charges.

If you’re using your credit card to build up your credit score, then most cards will allow you to set up automatic full payments. This ensures that you don’t get charged interest on credit that you’re just using to help improve your credit score.

4. Claim On Lost or Damaged Goods

By law, credit card companies themselves are actually liable if something you’ve paid for on credit (between £100 and £30,000) goes missing, arrives damaged or isn’t delivered, including an item or a service. This means that credit cards offer you extra protection on items. If something goes wrong, make sure you make a claim to your credit card company.

5. Use An App

A great idea to use your credit card wisely is to make the most of apps that credit card companies offer. These help you to keep on track of what you’ve borrowed, how much you need to pay back, interest and other information. They make it really easy to make repayments and to stay in control of your card.

If you have a bank account and a credit card from the same company, then it can often all be integrated into the one app so you can see all your financial information in one place.

Credit cards can be a fantastic financial tool when used well, helping to build your credit score, spread repayments and stay in control of your finances. Our biggest top tip is to ensure that you always keep on top of payments. Missing, or not even making, repayments can get you into financial difficulty. If you stay on top of what you use, credit cards can be extremely helpful in day to day life and planning for the future.
*collaboration post

No comments