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10 Ways to be Credit Card Smart

10 Ways to be Credit Card Smart

If you don’t use credit cards wisely, you could end up racking up more debt. Now it’s time to get credit card smart with these 10 credit card tips.

Credit cards, whether you like them or not, are a part of our lives and are frequently connected with unsustainable debt.

Credit cards have strict terms and restrictions, and if you don’t use them sensibly, you might quickly accumulate debts that you won’t be able to repay.

However, if you always pay on time and become credit card savvy, not only will you avoid credit interest, you’ll obtain sweet rewards and make some year-round savings.

To remain in control of your credit card finances, here are ten ways to use them wisely.

Credit Card Smart

1. Use a credit card for big one-off purchases

Each year, we need to make big one-time purchases like car insurance, a holiday booking, boiler maintenance, season ticket purchase or even new home repairs.

Rather than forking out the big purchase at once, obtain a new credit card with 0 percent on purchases with repayments for an extended period of time.

At the same time, save up the repayments into a savings account earning interest and before you begin to pay interest on your borrowed amount, use your savings to pay off the balance.

The caveat here is always to pay the minimum payment each month and at the end of the free interest period ALWAYS clear the balance; otherwise, your debt will start to accrue interest, and you’ll be paying more than your purchase cost.

2. Use a credit card that has a rewards programme

Several credit cards have rewards programmes that consumers can take advantage of.

Do you travel frequently? Get a credit card that rewards with air miles.

Love shopping? Get a credit card that pays you with vouchers.

Even better, and our tip – is to get a cashback credit card. The more you spend through the card, the more cashback you will receive.

Reward credit cards usually don’t have a zero percent interest-free period, so if you do use them you’ll need to pay back the amount in full each month; otherwise any cashback you accrue with be swallowed up by credit card interest.

3. Get a credit card that has purchase insurance

Credit cards are great for protecting consumer purchases bought with the card.

Unlike debit cards, credit cards offer some travel insurance if your travel agent or airline goes out of business.

It won’t replace your holiday, but at least you’ll get something back.

The same if you purchased a defective item in the shops or online and the seller is refusing to refund – you can claim through your credit card supplier under the Consumer Credit Act, guaranteeing you a refund.

4. Use a credit card abroad for purchases only

Again, unlike debit cards, travel cards don’t contain excessive non-sterling transaction fees, or hidden commission when exchanging currency.

Each credit card lender has different terms regarding spending your card abroad, so ensure you fully understand its terms. Some lenders can charge high-interest rates and fees for cash withdrawals.

Plus, should a charge be applied to your credit card that you don’t recognise – credit cards are more likely to give you your money back.

5. Never use credit cards to withdraw cash

Withdrawing cash from your credit card is the quickest way to put a massive hole in your finances. Not only you will pay interest on the debt, but the cash-advance handling fee is typically 2% or more of the cash withdrawn, meaning it’s costing you at least £102 for every £100 you withdraw.

Credit card lenders need to make a profit, and this one key way they convince borrowers to do – withdraw cash on their credit cards. Yes, it is easy to do and the convenience is wonderful, yet the long-term consequences of repaying your debt are simply not worth it.

6. Never borrow yourself out of debt or supplement your spending with credit cards

If you are struggling to make ends meet each month, the idea of transferring your debts to a new credit card to structure your payments may appear a good solution, but ask yourself – are you merely increasing your debt rather than reducing it?

The same with using credit cards because you cannot afford the purchase you need – yes, you may want that Instagram picture-holiday, but can you really afford it if you are spending over your means?

If you’re struggling with debt, contact the Money Advice Service for debt solutions.

7. Don’t stay loyal to one credit card

This is where you can be really smart if you are looking to reduce your existing debt.

If you have a 0% credit card on purchases, and the interest-free period is expiring soon, then you can move your balance to a balance transfer card.

These cards charge you no interest for a year or more so that as long as you are making the minimum payments, you will be reducing your credit card debt without incurring further interest.

Once this card’s free-interest period expires, move it to another balance transfer credit card.

The aim here is not to keep spending out of your means and gradually reduce your debt repayments in a manageable way without incurring further interest.

You must be very disciplined, otherwise you’ll end up paying interest on your debt at a higher rate than say an unsecured loan. You’ll also need a good credit score to keep applying for credit cards – if you don’t have one, then this hack is not an option for you.

8. Beware the different types of credit card debt

Credit card terms and conditions are exhausting to read – the small print alone at times feel like you’ll need to be a solicitor to understand the jargon. One thing to note is that different types of credit card debt attract different interest rates:

  • Purchases debt
  • Balance Transfer Debt
  • Cash Withdrawal Debt

Credit card lenders apply payments to the cheapest debt, leaving the highest interest debt (cash withdrawal debt) the last to be paid off if you are making your monthly payments.

Lenders are, after all, trying to make a profit and want to charge you as much as they can on your debt.

The tip here is that if you have several credit cards, then pay off the expensive interest rate first – otherwise you’ll be racking up interest for years to come when trying to reduce your balance.

9. Never spend on a ‘0% balance’ credit card

As per the point above, if you have transferred your balance to a balance transfer credit card, don’t be tempted to spend on it.

Lenders will entice you to spend so that they can charge you interest on purchases, even if the balance transfer debt has an interest-free period.

Transfer your balance, then place the card out of sight and should you need an interest-free period for big one-off purchases; apply for a separate one with an interest-free repayment period. There are some lenders who offer balance transfer and spend cards but as always, be careful about repaying existing debt whilst adding more.

10. Pay more than the minimum monthly repayment if you can

Whatever credit card you have or apply for, lenders expect a minimum monthly repayment to be made. Usually, this amount is so small that it only covers the monthly interest that is applied to your card.

Thus, you are not really clearing the debt, merely the interest. Your debt then will remain for years unless you pay more than the minimum monthly amount shown on your credit card statement.


Credit cards aren’t going anywhere anytime soon and are now part of our financial lives. More than 30 million Brits are using credit cards, and that number will continue to grow.

The good news is that, if used wisely, credit cards can be used to not only manage and reduce your existing debt, but can be used as a financial hack to increase your savings.

Remember, be smart about how you use a credit card; the temptation to use them can at times lead to spending that you cannot afford.

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