In collaboration with TSB
Plenty of people will warn you against ever taking out a credit card. I should know, my parents always warned me against it and my Mum still doesn’t have one to this day. My Dad has somewhat changed his tune and has a couple now which he is sensible with and uses them only in emergencies. I’ve made no secret of the fact that I also have a couple and Steve has one and whilst we were perhaps a little reckless in the past, we only ever use them now if we absolutely have to.
Just this week we have had some unexpected expenses on top of our MOT. We were expecting the car to need new tyres and had budgeted for that as well as the price of the MOT – but when they found something wrong, we knew we just didn’t have that cash handy. Now if we hadn’t had our credit cards, we would definitely been up a certain creek without a paddle. But because we have grown up and are acting much more maturely with our money, including our credit cards, we have been able to afford the majority of the work (with a little help from the in laws).
This is what I mean when I talk about using credit cards wisely. This doesn’t mean never use them – after all, there is no point in taking one out if you aren’t going to use it – and some people take them out specifically to up their credit rating – I know that’s why Steve did. Don’t use them on silly stuff like takeaways or your latest ASOS order – actually keep them for emergencies.
As I mentioned, we have had to use ours for unexpected expenses recently but because we have been sensible in how we use them, we had enough available credit to get us out of a sticky situation when required. Much like an emergency fund (which everyone should have and which I need to top up again), credit cards can be very handy in the hardest times.
What would I suggest?
Perhaps do as a family member of mine does. She has one which she only ever uses for car repairs, should they come up. If not required, it is ‘hidden’ in a place which is very difficult to get to, somewhere where you know you don’t want to spend the time and effort getting it for something stupid. If she does have some repairs, she either pays off the full amount within the month or a substantial amount more than the minimum payment to minimise the amount of interest she pays.
Some people put their credit cards in ice so they can only use it if they’re desperate. Some people do keep them in their purses but have strong enough willpower to not use them at every given opportunity.
So what would be my top tips for using credit cards wisely?
// Always pay the credit card off in full every month. If this isn’t possible due to car repairs, for example, being super expensive, pay over the minimum amount, keeping interest to a minimum and stopping you from spiralling into more debt.
// If you cannot trust yourself to not use it for silly things, keep it in a hard to reach place where you will only go to when absolutely desperate – for car repairs, work on the house etc
// If travelling abroad, keep the credit card away from the rest of your cards. That way you will not be tempted to use it and should you lose your main money/debit cards, you know that you have something to help you in this emergency.
// If you are only getting a credit card to build up your credit rating, only buy specific things on it. With Steve’s, he buys his diesel throughout the month on his credit card and then pays it off when he gets paid. He also does the odd food shop on it too and the same rule applies. There is no point getting a credit card to boost your credit rating and not using it as that will harm your credit rating. You also don’t want to completely max out the credit card and struggle to repay as that will also be harmful towards your credit rating.
Do you have a credit card? What are your top tips for using credit cards wisely?