Flexible Borrowing

One of the major advantages of most credit cards, compared to using debit or charge cards, is that you have up to eight weeks of interest-free credit before having to pay the bill.

This can be useful to ease cash flow if you have something important to buy before your next pay day, although it is very easy to slip into the cycle of making charges to your credit card because you have run out of spare cash for the month.

They are flexible, but are they your friends?

Borrowing on credit cards is still extremely flexible, as there are no complex processes to go through to borrow increased amounts. Many credit card issuers will increase your limit over the phone, just by asking you a few simple questions, such as confirming that you are still in your current job.

The ease with which you can hand over your card is both a blessing and a curse, as the convenience of being able to spend when you feel like it can also be accompanied by running up large debts very quickly.

Friends to keep an eye on

You may find yourself building up a credit card balance during certain high spending periods, such as when you go on holiday, or in the run up to Christmas. If you then manage to clear your balance in the intermediate period, you are unlikely to run up huge interest bills on your credit cards.

If you are finding that the balance is getting larger from one month to the next, then it may be worth considering how you use your credit cards in conjunction with your overdraft, your loans, and other borrowing.

Offsetting your credit card balance

An increasing number of card issuers are now allowing customers to reduce the interest rates paid by matching card spending with either a savings account or with a mortgage. Cards which are tied to savings allow you to build up a surplus when you can afford to, and to borrow on your card when funds are tight, or when you need to spend money for special events such as Christmas, a wedding, or to go on holiday.