Top tips for getting the most out of your credit card

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Top tips for getting the most out of your credit card

Once you’ve done your research and found the right piece of plastic for your needs, you need to understand how best to use your card to get the most from it. Here we look at how to use it carefully to maximise the benefits and steer clear of any costly mistakes.

Take advantage of a balance transfer offer

If you have a balance or different balances accruing interest, it can make good sense to consolidate these onto a balance transfer card with an interest-free offering. As all repayments go towards clearing the balance – not towards paying interest – this can give you the breathing space to pay off what you owe. It can also help you clear your debt more quickly, and more cheaply.

Be sure to check for balance transfer fees, as most cards will charge up to 5% of the amount you’re transferring. Remember to factor this into your calculations. It’s also worth remembering that with a balance transfer card you’ll usually be able to transfer up to 90% of the limit available, including fees.

You should also bear in mind that with balance transfer cards the offer usually only relates to the balance you transfer, any new spending will usually be subject to interest, unless you repay the balance in full each month. If you also want to spend using a credit card it might be worth looking for a separate card which has offers for purchases.

Watch out for when the promotional deals end

As the interest-free period will usually be limited to a set amount of time, make a note of when it’s due to expire. Once the 0% deal ends, the balance will start to accrue interest, and costs could soar. To avoid an expensive shock, try to repay your debt in full by the end of the interest-free period. That way, you can avoid paying any interest at all.

Never miss a repayment

It’s vital that you always make at least the minimum monthly repayments when they are due. Fail to do so, and you could face a ‘missed payment’ fee. Your lender may also withdraw your introductory offer – meaning your card could get a lot more costly.

Equally, if a late payment is recorded on your credit report, it can stay there for six years. A poor credit rating could make it harder to borrow in the future.

The best way to avoid missed or late payments is by setting up a monthly direct debit. At the very least, set a reminder for when the payment is due.

Clear your balance each month

Resist the temptation to go from month to month making only the minimum repayment on your card, as you will usually be charged interest on the remaining balance. In the long term this can work out to be an expensive way of borrowing money.

By paying off more than the minimum when you can afford it, you can reduce the amount of interest you pay, and clear your debt far more quickly.

Better still, clear your balance in full every month. That way, you won’t pay a penny in interest and your balance will go down a lot sooner.

Use your card to earn rewards

With some credit cards, you may be able to earn rewards such as supermarket points, cashback or airmiles on your spending. This can be a great way to get more for your money. But it’s important you only opt for this type of card if you can be confident about being able to clear your balance in full each month. If not, there’s a risk the interest charged could wipe out the gains from any rewards you earn.

Also be aware that rewards cards can often come with annual fees. Be sure to check this.

Check eligibility before applying

Before making an application, make sure you check your eligibility. This will give you an indication of how likely you are to be accepted without having an impact on your credit score.

You should also avoid making lots of applications in a short space of time, as each time you apply for credit, a ‘footprint’ will be reported on your file. These marks can make it more difficult to get credit in future, as lenders may view you as desperate for credit, and may turn you down. Getting rejected can also have a negative impact on your credit score.

Take steps to improve your credit score

Generally speaking, the best card deals tend to be available only to those with an excellent credit rating. A higher score will also mean you have more products to choose from.

Get into the habit of checking your credit report on a regular basis and making sure all the information held on it is accurate and up to date.

Simple steps to boost your score include getting registered on the electoral roll, always paying bills on time, and closing any accounts you are no longer using.

Use your card to improve your credit score

By using your card carefully, you can help repair a poor credit rating. This, in turn, will help unlock better offers on cards, loans, and other forms of credit in the future.

Things not to do:

Here’s a quick rundown of some of the costly mistakes you want to avoid making:

  • Don’t use your balance transfer card for purchases

    Try to avoid using a balance transfer card to buy things, as spending will incur interest. If you need to make a big purchase, look for a low-rate purchase credit card, or one offering 0% on purchases – or one offering 0% on both balance transfers and purchases.

    Cards with an interest-free period for purchases can be good for smoothing out the cost of a large expense, making it more manageable. But don’t forget, check when the offer expires and repay within this period if you can. You are taking out credit, so remember that the balance will have to be repaid eventually.

  • Don’t use your card to withdraw cash

    This could be a very costly mistake, as you will usually need to pay a cash advance fee – plus interest is charged right away, from the day you make the withdrawal. So you really should avoid this at all costs.

  • Be wary using your card abroad

    Check the fees you will face for using your card overseas, as costs could soon mount up during your trip. If you do want to use a card on your travels, look for one with low – or no – fees for foreign usage. Such cards may also offer access to airport lounges or other travel perks.

  • And finally, don’t forget to check the T&Cs

    Before using any credit card, go through the small print with a fine-tooth comb. You need to find out about all the fees, including those for cash withdrawals, overseas spending, balance transfers – as well as annual fees. Make sure you understand when any special offers will finish.

    In addition, there could be fees for missing a payment or going over your credit limit. These mistakes could also leave a mark on your credit record, making it harder to access cheaper credit in the future. Be mindful about always making payments on time and staying within your credit limit. As well as checking out fees, make sure you understand all the rates on your card, too – so you know exactly what your plastic is going to cost. Be sure to compare fees, rates and perks to find the best card for your needs.

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Use your card sensibly — if you don’t make repayments on time or stay within your credit limit you will pay extra charges, forfeit the 0% offer and getting credit in the future may be harder and more expensive.

Credit is available, subject to status, only to UK residents aged 18 or over.

NewDay Ltd provides our credit here at Fluid. TM Connect Limited promotes the Fluid card exclusively with NewDay Ltd and acts solely as a credit broker. Fluid is a registered trade mark of TM Connect Limited, which is used under licence by NewDay Ltd.

NewDay Ltd and NewDay Cards Ltd are companies registered in England and Wales with registered numbers 7297722 and 4134880 respectively. They form part of the NewDay group of companies. The registered office for these companies is 7 Handyside Street, London, N1C 4DA. NewDay Ltd and NewDay Cards Ltd are authorised and regulated by the Financial Conduct Authority (FCA) with numbers 690292 and 682417 respectively. NewDay Ltd is also authorised by the FCA under the Payment Services Regulations 2017 (ref no: 555318) for the provision of payment services.

TM Connect Limited is registered in England and Wales (Company Registration Number 06967012) and authorised and regulated by the Financial Conduct Authority in respect of consumer credit related activities (FCA FRN: 511936). Trading Address and Registered Office: Chapter House, 16 Brunswick Place, London N1 6DZ. TM Connect Limited is a credit broker and not a lender.