The number of credit cards in circulation in the UK has greatly fallen compared to 6 years ago. In 2005 there were around 70 million cards in the UK, by last summer that number had fallen to just shy of 56 million.
Some would say this is a good thing, credit cards allow people to buy items that they can not afford to pay back at the end of the month. For some people this meant that they had major debt problems and some people even had to file for bankruptcy. The balances held on credit cards overall have also significantly reduced.
Using a credit card in a responsible way can make it a very useful tool. Responsible adults having a credit card in the wallet is probably a good choice. Cashback is one of the benefits and if you have a good credit rating then you will probably get get a credit card that allows for this.
American Express offer a platinum card which gives great cashback but only if you are a big spender. Another great cashback credit card comes from Santander. This is known as the 123 credit card and it offers 3% cashback on petrol, 2% at department stores and 1% on anything you buy the supermarket.
0% credit cards can be a great way to borrow money if you need to make a big purchase but cannot afford to buy the item out right. If you’re not paying interest on the balance simply pay off a little each month. Some of the best credit cards for this are being offered by Tesco and Marks & Spencer’s.
With credit cards there is often interest-free payment which can last for up to 60 days. You must be careful to not let debt spiral out of control because after this interest-free period you will have to pay significant interest rates. The only exception to the rule of paying off the balance every month is if you have a 0% credit card. Do remember though that at the end of the interest-free period you will have to pay off the entire balance so be ready for this.
One of the most talked about benefits of credit cards is that they offer you greater protection. Section 75 from the Consumer Credit Act means that any purchase you make less than £30,000 and over £100 you will have protection. If there is a problem with the product or service that you buy you will be able to seek a refund from your credit card company.
This section of the Consumer Credit Act is most often used if the supplier simply disappears or is declared bankrupt. If you paid with a debit card you have no claim against your bank.