22 Jul 2021, Author:

Have you been using debit cards or cash to make purchases? If yes, you may want to have a look at credit cards as they are a convenient and arguably more secure alternative. Over and above the convenience of shopping, credit cards can help you manage your finances and repair or boost your credit history.

Credit card issuers are constantly building more features into their offerings giving you more advance functionalities such as purchase or fraud protection. However, to enjoy these and more benefits, you must use your credit card more intelligently. Here are some of the best ways to use your credit card to finance your purchases and rewards, build your credit, and pay down your debt.

In this article, we will also explore some of the ways you can use your card to avoid taking hits on your credit score and avoid piling up unnecessary debt.

Using Your Card to Finance a Purchase

Many personal finance experts will tell you that using a credit card to finance a purchase isn’t the best way to managing your finances. This is because credit cards have historically had high interest rates compared to other forms of financing.

Having said that, getting a credit card deal that offers an introductory 0% purchase APR can help you pay off big purchases without incurring any interest charges. If you manage to quickly pay off the credit card balance in full within the introductory offer period, your credit card can be the best option to finance your purchases.

As you check for your eligibility for a credit card, ensure you get all the information right. Take time to read the fine print. There are some cards that give you a deferred interest promotion. This means if you fail to clear the credit card balance during the offer period, the interest accrued during the introductory offer period maybe charged at the end of the offer.

Using Your Card to Repair Your Credit

Higher credit scores may open opportunities for access to favourable credit facilities. If you want to use your card to repair your credit, the choice of card is important. Credit cards can be broadly categorised into two – secured and unsecured cards.

Secured cards require collateral in the form of a deposit. The collateral which must be equal to your credit card limit is usually refundable. Unsecured credit cards on the other hand are issued without collateral and depends on your creditworthiness.

The payment history for both secured and unsecured cards is usually reported to the credit reference bureaus. Taking this as an advantage, you can make effort to ensure all your payments are made in time and if possible, in full. This will help you boost your credit status and portray a profile of responsible borrowing.

Paying off High Interest Debt

Using balance transfer cards with introductory 0% APR can help you quickly service your debt. There are many credit cards out there that give you no interest or low interest balance transfers for an introductory period.

This means if you transfer your high interest debt and make effort to clear it before the introductory promotion ends, you could save a lot on interest charges. The best way to handle balance transfers is to avoid taking out any additional purchases with your credit card until the balance is settled in full. If you have an urgent need for credit, you can take out emergency loans instead.

When transferring balances from other cards, beware of balance transfer fees. If possible, get a card that gives you an offer on transfer fees.

Making Use of Rewards

Credit card cashback and rewards are some of the common features issuers build into their cards. For instance, you can get rewards on things like airlines, travel, hotel, and shopping. The sort of rewards you want to earn will determine the type of credit card to go for. Also factor in your spending habits and lifestyle.

While using cashback credit cards or any other reward cards, beware of your spending behaviour. Credit card issues would want you to spend as much on your purchases so as to get more cashbacks. However, it is advisable that you don’t overspend on items just for the sake of rewards. Also, look out for annual fees on some of the reward cards as these can quickly add up. Essentially the rewards should offset the fee, but if not, it pays to look for a different type of reward or cashback card.

Watch Out for Your Credit Utilisation Ratio

The ideal way to handle credit card balances is to pay them off in full each month. However, if that is not possible, ensure your utilisation ratio is as low as possible. Your credit card utilisation ratio refers to the percentage of credit that you are using compared to the credit available.

For instance, if you have an approved credit of £5,000 and you have used £2,500, your utilisation ratio is 50%. The more credit you use as a percentage of the available credit, the harder it becomes for you to pay off the debt and this will certainly lower your credit score. In the course of time, you will find yourself paying more in interest. As a rule of thumb, your credit utilisation ratio should not exceed 30%.


Your credit card is a useful tool that can help you manage your finances when used correctly. Always ensure that you spend within your means even if rewards and cashbacks are pushing you to spend more. Your monthly payments should be made in time and the balance in full. If you can set up automated payments or direct debits, the better for you.

You should also understand your credit card terms by reading the fine print. This will help you avoid unexpected fees and ensures that you are always conversant with your credit card agreement. Always space out your credit card accounts as opening many of them in a short period can damage your credit score.