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Q: I have been thinking about getting a credit card, but I don’t want to get into debt. When are they really useful?
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A: If you’re the sort of spendthrift who burns through every pay packet as soon as they see it, then you’re probably best to stick with your debit card. Used responsibly, however, a credit card can actually improve your financial situation. It’s all about cash flow: whereas with a debit card the money you spend leaves your account immediately, a credit card will let you hang on to it for up to 56 days, assuming you pay the outstanding balance in full every month.
This can make the difference between keeping your account in the black or going overdrawn.
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Credit cards can also give you valuable protection that cash never could. Any purchase over £100 and below £30,000 is protected by law in most credit card agreements – so if, for example, you were to book a holiday and the operator went bust, your card company is obliged to refund your payment.
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Or if you bought a washing machine that turned out to be defective and the supplier refused to give you a refund, your credit card company should make good.
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One useful little tip that not many people know: in most cases you’re covered in full even if you’ve only paid a part of the cost by credit card.
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As always, it pays to shop around. While you could pay more than 50% interest with the wrong credit card, an introductory offer can see you paying no interest for months or, in some special cases, years.
Alongside a debit card, a credit card, used wisely, can certainly be a worthwhile addition to your wallet*.
*Always consult a financial adviser before taking advice. Opinions expressed here do not necessarily reflect the views of Sainsbury’s Bank.
Sainsbury’s Bank provides a range of services, including banking products, car insurance, home insurance, life insurance, pet insurance, travel insurance, travel money and savings.
We combine the shopping experience and banking by offering customers great products at fair prices, while consistently rewarding them with extra Nectar card points for choosing Sainsbury’s for their finance and shopping needs. Nectar points can be used towards travel, treats, family days out and shopping.
