Credit Cards: A Godsend - But Only If Used Properly!

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By Andrew Regan

There has been much debate recently over the subject of credit cards, and whether lending companies should be more selective as to whom they grant credit to. The dire state of thousands of Brits' bank accounts would likely support the theory that many people are too quick to borrow and spend money that they later find they can't afford to pay back.

Few could disagree that credit cards should be used more carefully. Although being in debt has almost become the accepted norm, is doesn't mean it's something to be taken lightly. However, that being said, there's no denying that when used responsibly, a credit card is a very useful tool.Perhaps the most attractive aspect of using a credit card is not the ability to buy now and pay later, but the protection it offers the buyer. Goods bought with a credit card are normally insured for a period of a month of two, and may also cover losses or accidental damage. So, if for example you were to purchase a new DVD player that was faulty, the purchase would be insured by the credit card company and you could get a refund.

This can also apply if goods or services were not received. For example, if you bought something online, which you never received, you could contact the credit card company and dispute the purchase. If deemed a legitimate claim, you would not have to pay for the goods.

Credit cards are also very useful in times of emergency, and have saved many people's skin, when in a tight spot. For example if a relative living abroad suddenly falls ill, and a flight is needed quickly, a credit card can be a saviour.

The important thing to remember with a credit card is that it's not a source of "free money". Far from it; borrowing on a credit card is one of the most expensive ways to get credit, and with this in mind you should think very carefully about what you buy, whether you actually need something (or just want it), and how long it will take you to repay your debt.

Remember, credit card companies make their money from people who are continually in a state of debt, but can pay back the minimum monthly repayments. So if you want to use a credit card to your advantage rather than just line the lender's pockets, make sure you pay off the card in full every month, and don't borrow more than you need.