The Advantages of Using a Credit Card and What to Look Out For When Shopping Online
There are plenty of advantages to buying items or services with a credit card. Whether you’re looking to build your credit score or prefer using it thanks to its increased fraud security, that little bit of plastic in your pocket can come in very handy.
But what’s the best and smartest way to use your card?
You may not have given it a second thought, but your credit card is best used for certain types of purchases. Here, we take a look at some of the things you should and shouldn’t buy with your flexible friend.
What advantages are there to paying with a credit card?
You may have taken out a credit card with a particular purchase in mind. If you are thinking about buying an expensive item such as a state-of-the-art TV, the latest smartphone or tablet, then it’s best to put it on your credit card.
The one big advantage of paying on credit rather than with cash is purchase protection (otherwise known as credit card protection). Depending on your provider, this option would protect you from any damage to or theft of the item for anything up to 120 days after the purchase was made.
Petrol or diesel
You should also pay for your fuel with a credit card wherever possible. In recent years, petrol stations have been one of the main targets for card detail theft. Security and technology has been improved in many areas - particularly at supermarket forecourts - but your credit card’s fraud protection will allow you to purchase fuel without the worry.
Cashback and rewards
There’s also the attraction of cashback rewards, and there are many of these in the hospitality and travel industry. Many restaurant chains, airlines and car rental firms offer many different deals on credit card purchases; even though they may not sound that lucrative on paper, use them often enough and you could end up with a free meal or even a free flight.
When shopping around for a new credit card, check out their purchase protection terms - it could be a lifesaver in the long run and will save you having to pay out extra on repairs or additional insurance.
Learn more: How to Apply for a Credit Card
How do I know if I can enter my credit card details safely online?
As many people have been spending a lot of time at home during 2020, we haven’t been able to go out and hit the high-street shops like we usually do. The vast majority of purchases this year have been made online at home, which has sadly increased the amount of fraudulent activity and scams.
Larger retailers will of course be the most trustworthy, but it’s quite easy for smaller sellers to obtain an SSL certificate, which is a good pointer that it’s safe to enter personal details such as your name, address and credit card details on the site. The easiest way to check for this is to look at the website URL; if the address begins with https: (rather than simply http:) then the site does have an SSL certificate - the extra ‘s’ stands for ‘secure’.
In most browsers, you can also look for the padlock symbol which usually shows up before the URL in the browser address window. This is also a sign that the site you’re currently visiting is secure.
Can I trust smaller merchants as much as the larger sellers online?
As long as the site is set up with an SSL certificate - as explained above - then you should be good to go with using a credit card to make purchases online. If you’re thinking of purchasing from a smaller website for a more bespoke item, using a credit card will offer a great deal of protection should anything go wrong during the sales process.
If you’re unhappy with the quality or description of a product, then you’re most likely going to return it to the merchant. Most credit cards offer a ‘return protection’ option which stretches out the length of time where you can send back an item that you’re not happy with.
Some smaller merchants may have a very strict time period in which you can return a product, but if your credit card company offers return protection, you can then file a claim for a refund through them.
Learn more: Credit Card Protection Explained
What Shouldn’t I Buy on my Credit Card?
One of the most important things to point out is that your credit card is not a cash card. Yes, it does offer you the opportunity to take money out at a cash machine, but this is definitely not advised as the fees can be very high and there will be interest to pay on the amount you take out.
It may be seen as a little luxury, but a credit card is to be used more for convenience. If you’re unable to pay off the full balance each month through your usual bank account, then the amount of interest that will build up could make it an expensive aid. Having said this, paying the minimum balance on time each month should help maintain your credit score, but be aware of the interest building up in the background, and remember, if you’ve spent a substantial amount of your credit card limit, but you continue to pay off only the minimum payment, this may show that you’re desperate for money in the eyes of lenders, so they may see you as a higher-risk consumer. This, in turn, could then have an impact on your credit score and your ability to borrow.
It’s not advisable to pay any of your utility bills (including your mobile phone bill) via credit card as the interest that will build up will make these bills even more expensive in the long-term.
Finally, always be aware of the dangers of someone obtaining your details fraudulently. If you’re out on the town and the drinks are flowing, you may not be aware that someone could be skimming your card details. Pay with cash from your regular bank account, or you could end up buying lots of rounds you weren’t planning on!
While scams are at their peak during the Coronavirus pandemic in particular, it is important to remain extra vigilant and not to reply to strange emails or texts.
For further information and advice, take a look at our related articles below. To check your score now for a better understanding of your borrowing eligibility, tap the button to get started: