Sort out your finances with a credit card

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Last updated: 23/07/2020 | Estimated Reading Time: 5 minutes

The pros and cons of using a credit card

In the right hands and used correctly, a credit card can be a fairly invaluable financial tool. The added flexibility when it comes to budgeting and the ability to make purchases that would otherwise be nearly impossible acts as a great incentive for many.

However, if you’re not careful, you could find yourself getting stung by high interest rates and other fees and you could end up worse off than you were before you took out the card.

Our quick guide will go over the main advantages and disadvantages associated with credit cards.

In This Guide:


Here we’ll go over some of the main benefits you can enjoy if you take out the right credit card, from financial flexibility to rewards schemes allowing you to potentially fly around the world for next to nothing.


Given the timing of pay checks, making certain purchases at certain times of the month can be tricky. A credit card frees you up by allowing you to spend money you don’t have and then pay it back over time in the future.

Low on money at the end of the month but need to do a big grocery shop? Not a problem if you’ve got a credit card.

So long as you can be sure you’ll have enough money to pay off the balance, a credit card allows you to somewhat exceed your basic means and makes your financial life much more flexible than it would be otherwise.

Making Large Purchases

By the same token as the above, making large purchases like buying holidays or white goods is much easier when you have a credit card.

Given the expenses of daily life, it is often hard to constantly put enough money aside to be able to make expensive purchases using cash. A credit card allows you to do so and then to pay for what you buy retrospectively.

One of the best things about credit cards is that it is essentially up to you how much you want to pay back each month.

The less of your balance you pay off, the more you’ll have to pay in the future due to interest but if you budget carefully, then you can afford to pay less one month and more the next, balancing out your overall payments.

Payment Protection

Beyond the flexibility offered, another reason why using a credit card to make large purchases is a good idea is thanks to the payment protection offered by Section 75 of the Consumer Credit Act.

What this means is that if you make a purchase that goes awry and the retailer in question refuses to refund you, then you can request a refund from your credit card issuer.

This can be particularly helpful if you’re paying for flights and the airline goes bust before you are due to leave.

Section 75 applies to all credit card purchases valued between £100 and £30,000.

Rewards Schemes

There are various credit cards available that can offer you rewards like cash back on any purchases you make using them.

So long as you can afford to pay the slightly inflated APR that they tend to come with, and you can manage the monthly repayments, then by using a rewards based card you can spend as you usually would and accrue various benefits as you do so.

Some cards will offer cash back at a percentage of everything you spend. Some with offer you points that you can then redeem on international flights, either allowing you to purchase the flight ticket outright with them or to upgrade existing flights to first class.

Credit Rating

Having a decent credit rating is crucial if you want to take advantage of the best credit cards and loans on the market.

If you take out a credit card and use it responsibly, paying off as much of the balance as possible each month and never falling behind on payments, then your credit rating will steadily improve.

You can even take out a specialised credit building card with a low limit and a relatively high APR that is designed to help people with poor or limited credit ratings get themselves in a better position to use credit in the future.


While credit cards can, as detailed above, be a very useful tool to have in your wallet, there are certain things you should look out for if you want to avoid being swamped by debt.


The APR, or annual percentage rate, is essentially the cost of spending money on your credit card, including basic interest rates as well as any other relevant fees.

Ideally, you want the lowest APR possible, but it is not always totally straightforward. Different types of card will come with different typical APR levels – rewards based cards and credit building cards are often more costly than some more basic credit cards for example.

Cash Advance Fees

One thing you should avoid doing at all costs is withdrawing cash from an ATM using your credit card. If you do so, you will rack up hefty cash advance charges and so unless it’s absolutely necessary to use your credit card, you should always stick to using your debit card to get cash out.

Choosing the right credit card

In order to make the most of your credit card, you should first have a think about exactly what you’re going to need it for. There are several different types of card available and so it’s crucial that you pick the right one.

Whichever card you’re after, make sure you’re shopping around online to get the best deals. Use our free credit card comparison service to see what kind of APR or other benefits you could enjoy.