Understanding what you should and shouldn’t put on your credit card

Credit cards can be a great way to borrow money, but it’s important that you know what should and shouldn’t be put on your card to get the best use of it. This, of course, depends on what sort of credit card you have. If you are unsure on what purchases should be made on your card, these tips might help.

How big is the purchase you are looking to make?

Let’s take a possible scenario where you might need to borrow money: You are planning on fixing up part of your home. If you are hoping to redecorate a room then a credit might be a good option to use when buying everything you’ll need (paint, brushes, ladder etc). This won’t be an extremely expensive job and you could even use a 0% purchase card to buy all these items, provided you are certain that you can repay the balance in full before the no-interest introductory offer ends.

If you’re doing a more extensive home-improvement, such as putting in a new kitchen or building an extension, then a personal loan might be a better option. You’ll need more money so you could look into a personal loan that could offer a lower interest rate than a credit card.

Some cards should never be used for spending

A balance transfer card is a perfect example of this. Balance transfer cards allow you to move a balance onto another card which offers a no-interest introductory period – allowing you to save money on interest if you commit to paying the balance off in the introductory period. This deal is only offered on a transferred balance, so if the card is used to take out cash or pay for items, this balance will incur interest at the usual rate.

Carefully read the details of any card you are accepted for – it might seem dull but it can ensure you don’t use it the wrong way.

Spend carefully

Credit cards should only be used with a budget plan in place. If you overuse your card and have trouble paying off the balance you will not only incur possible fines from your provider but also damage your credit rating.

Reckless spending on your card is bad in every way and will harm your chances of being accepted for credit in the future. However, if you use your card sensibly and spend within your means you can easily reap the rewards credit cards offer.