A credit card is a financial instrument that basically lets you make payments. However, since it's linked to a current account, salary account or another financial product, it usually comes with different advantages, so it's not just a payment method.
The benefits of credit cards include:
- You can pay for your purchases or “treats” conveniently, month by month.
- Credit cards offer various interesting payment options, such as total repayment at the end of the month with no interest or deferred payments tailored to your repayment capacity. This allows you to choose the best option for your situation at the time.
- Many credit cards are associated with commercial establishments such as household appliance, book and technology stores and supermarkets. These often allow customers to buy things in their shops and postpone payment at 0% interest.
- Credit cards usually come with insurance offering some degree of cover. Travel assistance and accident insurance are the most common types of insurance associated with credit cards. This cover applies if the trip was paid for using the card.
- Credit cards are a passport that enable you to pay in businesses all around the world, with complete confidence and security. Although it is hard to believe, in some places - such as the US - debit card payments are not always accepted. Credit cards mean you don't need to carry cash and you can still pay for your purchases while you are travelling, and choose how you want to pay for them: over time or at the end of the month.
- Some credit cards associated with current or salary accounts reimburse a percentage of the money you spend, when the instalment payment method is chosen.
As we have seen, credit cards have many advantages and useful features. But it is important to keep your finances and borrowing under control, and to control and manage your credit card payments.
Why use a credit card?
There are times when credit cards can be very useful, for example:
A very common - and recommended - use for credit cards is paying for holidays and trips. This has the advantage of offering appropriate insurance cover for lost luggage and travel assistance, etc.
In addition, when you buy a plane ticket or book a hotel with your credit card, the money is not taken from your current account immediately. This means that refunds are easier if you change your plans and the funds never have to leave your current account. You may also be offered a better price when you rent cars and pay for them with your credit card.
Another example is paying unexpected expenses, as using your credit card means you can pay them back over time or when you have the cash in your account. Credit cards are also useful for paying for work on your house: bit by bit is always easier. Remember, the key is to control your spending and use your credit card properly so that it doesn't undermine your finances.