How to manage your credit card

Credit cards can offer a flexible and convenient way to borrow, so knowing how to manage your credit card can help you get the most out of it and save money. This is how to make the most of your credit card and avoid spiralling debts.
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Credit cards are ideal for short term borrowing, or ato spread the cost of larger purchases.

Plan your borrowing in advance

The key to making the most of a credit card is only borrowing what you can afford to repay. This means having a clear idea of how much you can afford to spend on your credit card and keeping an eye on your balance throughout the month, so that you don’t exceed your planned spending. 

Aim to clear your credit card balance in full 

Ideally, you should aim to pay off your credit card balance in full every month. That way you won't be charged interest on your spending.

For many people that may not always be possible. If so, there are some rules and guidelines you need to follow if you want to make the most of your credit card.

  • Always pay at least the minimum amount: This is set by your provider and is a percentage of what you owe plus interest.

  • Pay more than the minimum if you can: Paying off as much as you can will save you interest and clear the balance faster.

  • Pay off your most expensive cards first: If you have several cards, put as much as you can afford towards paying off the card with the highest APR, and make minimum payments on the rest.

Your credit card comes with a credit limit, which is the maximum unpaid balance that you can build up on your card. Make sure that you know what your credit limit is and if you need an increased limit, contact your credit card provider.

You will be charged a fee if you go over the credit limit without authorisation, so make sure you pay off enough each month to stay under your limit. Here is how credit card limits work.

Pay your credit card bill on time

Missing a credit card payment can be expensive, as you’ll likely incur late fees. A missed payment can damage your credit score too, making it more difficult and costly to borrow in the future.

One easy way to ensure you never miss a payment is making automatic payments by setting up a direct debit. You can set up a direct debit using either your online account or by calling your provider.

Paying by direct debit is the easiest method because the money will come out of your account every month without the possibility of forgetting to pay.

You can set up your direct debit to pay the full balance, the minimum payment or a fixed amount. You can also pay your bill:

  • Through your online banking account

  • By bank transfer using internet banking or in a branch

  • By cheque sent to your bank when you get your bill

  • By standing order for a fixed amount to your credit card company

  • In person with cash if your provider has a local branch

Remember that if you do not pay the full balance, you will be charged interest on the outstanding balance until it is cleared (excluding any promotional interest-free rates).

Even if you don’t set up a direct debit, there are a number of ways to pay your credit card bill on time. You can typically pay your credit card bill using Faster Payments, by debit card or by cheque.

Avoid withdrawing cash with a credit card

Cash withdrawals on credit cards are not free and can be costly, unlike debit card withdrawals. 

Although you can technically use a credit card to withdraw cash, it is an expensive way to access cash and it can impact your credit rating too. When you withdraw cash with a credit card, you will incur charges and leave a mark on your credit history.

Find out more about withdrawing money on a credit card here.

Check your credit card balance regularly

You can check your balance online, on your most recent paper statement, or you can ask for your balance by phone or check it at a cash machine. Some providers also send text messages to confirm your balance and remaining credit limit either any time you text them to request it or once a week or month. These days it’s common for most credit cards to offer a smartphone app, which allows you to check your balance and make payments. 

It is important to check your credit card balance to make sure that there is no fraudulent activity on your card. You can find out more about how to repay your credit card here

Report your lost credit card

If your card is lost or stolen, let your provider know immediately because someone else could use it online, over the phone or for contactless purchases.

You should be refunded in full for any transactions that happen after you have lost your card.

Record the time you informed your provider and the last transaction you made yourself. You can contact them by:

  • Calling your provider

  • Logging into your online account

  • Going into a branch

  • Using your mobile banking app

Your provider will then cancel your card and send you a new one by post.

Getting a refund on your credit card purchase

If something goes wrong with a purchase, like the company you buy from goes out of business, or they fail to supply what you ordered, you may be able to make a claim by using one of the following options:

  • Section 75, which can protect purchases between £100 and £30,000

  • Chargeback, which could protect any purchases under £100 or over £30,000

  • Purchase protection offered by your credit card provider.

Although you can approach your credit card provider for a refund, you should contact the retailer you bought from first.

Find the best credit card for you, whether you're looking for 0% card for balance transfers or purchases or day to day spending and rewards