Credit cards are a financial double edged sword. On one hand, a credit card that’s paid off on time every month is a great tool for building an enviable credit history. It’s also a convenient way to make payments on and offline.

However, when in the wrong hands, credit cards can sap your savings and suck you into a spiral of debt.

Because of the increasing credit card debt in the UK and the US, many so-called financial experts have been instructing people to rip up their credit cards and toss them in the trash. And like most blanket financial advice, these words of wisdom don’t ring true in all cases.

The truth is, like any tool, it’s how you use it that makes all the difference. Here we’re going to discuss the role credit cards should play in your financial world.

The first step to winning with credit cards is to apply for the right cards. Many people rush into this decision and get the first card that promises rewards or features their favorite sports team on the front of the card.

Savvy financial folks know better and spend a fair amount of time vetting credit card companies.

• Check Your Credit First: 

   

  Your credit score is what lenders and credit card companies use to determine what you’ll qualify for. If you don’t know and understand your score you’ll simply be shooting in the dark whenever you apply.

  As you may expect, a higher score (above 650) will get you better rewards and lower interest rates. If you’re score has taken a beating lately you may want to work on that before opting for a new credit card. And if you’re like most people your existing credit cards is what got you into trouble in the first place!

• Shop Around: 

   

  One of the dastardly tricks credit card companies play on unassuming consumers is trumpeting their rewards while downplaying their interest rates. You should look beyond the marketing hooplah and read the fine print (as boring as it may be). Remember that even a small difference in interest rates can add up to thousands of dollars if you run into problems paying off your credit card on time.

• Make a Plan: 

   

  Before applying for a card make sure you have a set plan in place for paying it off. Many people find that they actually can’t make the payments off every month when they actually sit down and do the math. And if you find that it’s close, you should probably wait to apply before you have enough wiggle room to become 99% sure that you can pay every payment on time.

• Limit Your Applications: 

   

  One common mistake people make when applying for credit cards is applying for every card under the sun in the hopes that they get approved for one. The problem with this strategy is that is can quickly trim down your credit score as each application counts as a credit report request/inquiry. Do your homework, find one or two that look promising and send in your application. Leave the rest as a backup plan in case you’re rejected.

When you receive that shiny piece of plastic in the mail it’s tempting to go out for a shopping spree. And with credit cards often offering temporary low interest rates for the first 3-months, this urge to splurge can be like getting caught in an undercurrent.

So before you even get your hands on the card, make sure you commit to a sensible spending plan.
Also consider these two tips for making your credit card work for you… and not the other way around.

• Make Automatic Payments:

   

  If you want to quickly decrease or eliminate the risk of late or missed payments, consider linking your credit card and checking account. This way, you’ll have your payments made on-time automatically. Credit card companies hate this because it means no interest for them but it’s a feature that almost all savvy consumers take advantage of.

• Get Proactive: 

   

  It’s important to be proactive about how you’ll use your card. Otherwise you may find yourself making impulse purchases that you can’t afford. A best practice is to use your new credit card for one type of purchase, such as a utility bill or for new clothes. This inherently limits you from overspending and getting into hot water.

If you follow this advice you and your credit card will be a perfect match!

We’re constantly scouring card providers to find you the best rates possible. We’ve sorted them by prepaid cards and credit cards. Just click one of the tabs below to see what you can apply for.